Purchase to Pay

Over the years I’ve had some great ideas. I’ve had some pretty dumb ideas too. I’ve followed through on some – both the good ones and the dumb ones but most, I have to admit, have been left as just ideas. But it still gives me great satisfaction when I get to see one of my great ideas executed perfection – by someone else. A number of years ago, I had the great idea that smart phones could be used as purchase to pay tools. I wrote about it here. The problem of process compliance in some situations like construction sites it that it has, historically at least, been difficult to put IT solutions in place. Purchasing Cards have been tried but rather than helping to support a robust purchase to pay process they tend to remove the process entirely – the “Nuke” option. But now, everyone carries a smart phone and it’s perfectly feasible to put purchasing software in the hands of everyone, regardless of their working environment. It’s not just possible – it’s delivered, and a few weeks ago, I had the great pleasure to speak to Patrick Hopkins, CPO at Coca Cola Bottling Company to understand how they’ve implemented a Coupa solution to do just that.

How much does it cost to implement purchase to pay best practice? Having spoken to many senior finance and procurement people, I get the impression that many of them think more about how much they can save by ignoring it. Sure, they value the basics but the whole nine yards is seen as an expensive luxury. So how much does best practice cost to implement? How long is a piece of string? It depends of course on the size and scale of the organization and it may be better to ask an alternative question: How much does it cost not to implement best practice? There’s some really interesting research that’s just been published by OB10 that can help answer that question.

Everyone knows that times are tough and times are toughest for small businesses. They're faced with obstacles that can seem insurmountable - paperwork, regulation working capital costs. But there's one obstacle above all others that can strike fear into the every small business - the late payer. They are a scourge. Over years, an obsession with the optimisation of DPO (that's accountant-speak for funding your business at the expense of your smaller, weaker suppliers) has become a central financial strategy for many large organisations. Some of the biggest household names in the UK were recently outed for extending their payment terms to an astonishing 180 days and there is an increased awareness among the public and politicians that this practice is grossly unfair.

Ever since I read Hell’s Angels by Hunter S Thompson, I’ve always found the image of bikers compellingly attractive. And so I’ve not spared any cash when it comes to getting my own image right. When I’m wearing my black Rukka Merlin jacket with matching water-proof Gore-Tex, armored leather jeans and my Schuberth C3 Pro helmet with built in antennae, even though I say it myself, I look the business. All I need now is a bike. I remember from my teenage years, as I suspect will many others, the sad soul with the helmet and no bike. Pursuing the biker dream with not enough money for the full package, he missed the point. Having a helmet doesn’t make you a little bit of a biker. It makes you a little bit of an idiot. Making only a partial investment isn’t always an incremental step towards a complete solution. Often it’s a waste of money. And that’s what e-procurement is if it’s implemented in isolation – a complete waste of money.

The European Commission has declared some ambitious targets for e-procurement. They reckon that €2 trillion can be saved and they intend to get government organisations using purchase to pay best practice to deliver these savings by 2016. These targets are of course way too ambitious. What’s more, the Commission is going about it in completely the wrong way. They may be ambitious and their methods may not be perfect but I’m impressed and delighted at what they're doing.

Last week at EXPP I had the great pleasure of meeting Dave Wallis, Director Eastern Hemisphere (great job title) for OFS Portal. You could be forgiven for not knowing of OFS portal. OFS Portal is highly niche specializing exclusively in the Oil and Gas industry. In their own words it is a “group of diverse suppliers working together with a non-profit objective to provide standardized electronic information to B2B trading partners to facilitate e-commerce in upstream oil and gas products and services.” That is pretty specific but don’t let that mislead you in any way – there’s many industries outside of upstream oil and gas that could take a leaf out of their book. They are in many ways exemplars for purchase to pay and they’re now adding to their credentials by partnering with Tradeshift.