26 Nov 6 Things You Can Do To Improve Purchase to Pay
At a recent Purchase to Pay conference in Amsterdam, representatives from a wide range of industries got together to compare notes – warts and all – on their P2P programmes
It is really interesting when a diverse group of Purchase to Pay professionals from different organizations get together to compare notes. Despite working in isolation, there is a great deal in common in terms of the challenges faced and the approaches adopted to overcome those challenges. But there’s also a healthy variation in approach and below is a short list of some of the best takeaways from the conference.
You might think that your AP processes are spot on but most will find that they occasionally pay an invoice twice. Employ a specialist third party on a shared reward basis to interrogate your payment records and find the duplicated. You might be surprised how often it’s happened – and if there’s no duplicates – it won’t cost you a penny.
Forecast Cash Flow
Getting better at AP process will make your organization more efficient and cost less but there’s another key benefit. Higher accuracy in terms of first time matching for example, makes cash flow more predictable and predictable cash flow is a great tool for finance.
Being able to provide accurate cash flow forecast for is a key commercial benefit that gives P2P extra credibility.
Fast Track Approvals
There will always be exceptions to every rule. If someone needs to break the rules – for example in an emergency, don’t allow corners to be cut by allowing P2P process to be bypassed. Instead, introduce and document a “fast track” process to allow for urgent or exceptional situations. In reality, the fast track process may be very similar to a short cut but having a documented contingency process sends out an important message that the quality of controls should never be compromised.
Link your KPIs to real commercial performance measures
KPIs such as % first time match, straight through processing etc are fine for measuring your P2P performance but if you want visibility at C level (in a good way that is) start publishing KPIs that the CFO can relate to such as DPO and GRNI. P2P has a direct impact on these numbers and you took take ownership of them.
If you operate a No PO No Pay policy, don’t just communicate it internally. Invite your suppliers in to see you. Let them meet the AP team and explain the policy in a constructive and positive way. Being open with supplier and creating direct channels of communication will increase buy in to the policy.
Get P2P into the Procurement Process Methodology
Procurement isn’t a sub-set of P2P but the terms of engagement between buyers and suppliers – the P2P ground rules – should be a part of any new or renewing contract discussion. Get procurement to put this into their procurement process methodology so that P2P expectation are set at the beginning.