Purchasing Process

We hear all the time about big companies paying suppliers late, abusing their power to take advantage of the good will of smaller companies by delaying payment for as long as possible in order to enrich themselves at the expense of weaker, more vulnerable companies. Well, it’s not true. Deliberate late payment by large companies in all but a few exceptional cases doesn't go on. Systematic management of cash flow by withholding payments is a myth. The reality is, surprisingly, much worse!

There's an old magic trick that I am sure everyone is familiar with. The magician approaches a fully laid dining table with full place settings including wine, wine glasses, condiments and a small vase with a flower in it. He takes hold of the table cloth. As quick as a flash he tugs at the cloth removing it from under the crockery and glassware without any of it moving save a slight rattle. Well, I have a tip for everyone. Don't attempt this trick - especially if your delivering a business briefing over breakfast at the Ritz hotel in London to the a select group of captains of industry. Believe me - I speak from personal experience - it's not big and it's not clever. There was something very memorable about that breakfast briefing in 1998. It was the look of absolute horror on the face of the CEO of one of the biggest retail groups in the UK - not at the silly icebreaker with the table cloth - it was the prediction that consumers would, within 10 years, be doing their grocery shopping on-line.

Have you ever installed the plumbing in a large office? Neither have I. And if I did I would hold out much hope of it not springing a leak or two. It's a complicated business and you would think twice about having your corporate plumbing  installed by anyone other than a trained professional. It's a shame that most organisation don't apply the same rigour when it comes to installing P2P processes. It's a useful analogy. Installing only half of the purchase to pay process is like installing half of the plumbing. Turn the water on and it will be like a monsoon. Both ends of P2P need to be joined up - but knowing which purchasing component joins with which payment component isn't always obvious.

AP automation has got a bad name for itself in some quarters. You will often hear of projects that meant well but either failed to meet expectations or were abandoned completely. There are many reasons why projects fail such as poor change management or lack of sufficient resource but for AP automation projects, there are three particular issues that crop up again and again in failed or disappointing projects.