Most leaders know there’s a gap separating procurement and finance. However, you may not recognize the avalanche of time, money, and productivity that’s falling into that chasm. Simply put, when your accounts payable (AP) team isn’t working within the same digital system as procurement, it holds back the whole organization.
However, technology can eliminate that gap between procurement and finance. This article digs into the biggest problems that occur when finance and procurement work within separate enterprise resource planning (ERP) systems, along with ways to bridge this costly divide.
Why Finance and Procurement Need to Be on the Same Page
If you want your entire organization to march forward, procurement and finance need to move in lock-step. When these two departments aren’t working together in the same digital system, it can cause severe problems. Here are a few reasons you need to unify your finance and procurement teams:
Damaged Supplier Relationships
Procurement relies on consistent supplier collaboration to build savings for the organization. However, if procurement and finance aren’t aligned, payment processes become sluggish and inefficient. That can cause supplier relationships to wither.
Any time procurement has to work on tasks like tracking down order information, correcting purchase orders (POs), or rematching invoices, time is lost. That’s time that could be spent building out strategic partnerships with suppliers or mapping out new opportunities for company savings.
Late Payments
For procurement to grow relationships with suppliers and uncover new cost-saving opportunities, they need to avoid late payments at all costs. Unfortunately, the disconnect between finance and procurement often causes more late payments. And according to one survey, 86 percent of procurement workers say missing data or errors caused late payments.
In most cases, those errors occur because AP is bombarded with non-PO invoices, mismatched invoices, or incomplete documents. That means they have to manually plug in information, slowing down the payment process and increasing the risk of additional errors. Without a connected, automated AP system, these problems hold up payments and damage the company’s relationship with suppliers.
Limited Visibility
Procurement has worked hard to build relationships with suppliers and secure discounts. However, the gap between procurement and finance can cause that hard work to swirl down the drain. Too often, employees across departments will work within separate ERPs or digital systems and simply won’t know who your approved suppliers are. That can lead to maverick spending, which limits spend under management, clouds procurement’s vision, and makes it hard for leaders to do their jobs.
How Can an Advanced Procure-to-Pay Solution Help?
With technology rapidly evolving, finance and procurement no longer need to work in silos. Here are a few ways an advanced procure-to-pay (P2P) solution can connect and improve your organization:
Cut down errors.
Advanced P2P systems allow you to centralize and digitize data management. AI-driven P2P technology will also highlight errors, identify mismatching invoices, track record exceptions, and shed light on payment problems. It also can predict problems before they occur and proactively correct mistakes. That all means fewer mistakes, faster payments, and stronger supplier relationships.
Make better decisions.
With an intuitive P2P platform, all purchases move through approved suppliers, and the system retains accurate spend data. That makes it easy to see complete financial reporting and forecasting. It also gives procurement clear insights, including real-time analysis, so leaders can identify strategic spending opportunities and make smarter decisions.
Sharpen your P2P processes.
When finance and procurement work within a connected system, it’s easy to monitor, evaluate, and improve key performance indicators (KPIs) for procurement and AP processes. That cuts down work disputes, pushes the whole organization forward, and makes it easier for all employees to work more efficiently.
Fast track invoices.
Payments are often delayed because there are mismatches or holdups in the invoicing and PO processes that employees have to correct. However, cutting-edge SpendTech™, or spend management technology, uses AI to quickly match payment details, scan PDFs or handwritten invoices, and correct issues. This can drive up the percentage of invoices that pass straight through to processing, freeing up your team for more strategic work.
Speeding up invoicing and reducing errors also makes it easy to process and pay supplier invoices on time or early. In turn, employees take advantage of early payment discounts, and leaders can see how to adjust payment schedules to preserve cash flow. Plus, your relationship with suppliers improves because they receive payments on time and without any disruptions.
Bring Your Finance and Procurement Teams Together
It is possible to bridge the divide between procurement and finance. But if your teams are using multiple ERPs, it will be tough—if not impossible—to bring your departments together. Download our free guide, Spend Matters: The Evolution of Corporate Procurement Systems, to learn how you can use procurement systems to combine your company’s ERPs, share data across departments, and overcome your biggest procurement challenges.
