Purchase to Pay – All Talk and No Communication

Purchase to Pay – All Talk and No Communication

Posted by Pete Loughlin in Purchase to Pay, Purchase to Pay Process 18 Jun 2010

Purchase to Pay, P2P and Dynamic DiscountingWhenever I hear professionals using  jargon, I’m reminded of the story about the newcomer to the monastery. The new monk is enjoying getting to know his surroundings and learning the customs of his new communal life. After dinner on his first evening, one of the monks stands up and shouts “Seven!”. All of the other monks roll on the floor laughing. Another stands up and calls “Twenty Three!”. Again, all of the monks laugh helplessly. The novice doesn’t understand what is going on until one of the older monks explains. “They’re jokes. We’re a closed community and we all enjoy a good joke but we’ve heard them all before. So, instead of telling the whole joke, we’ve numbered them all”  and he encourages the new monk to join in. Like a lamb to the slaughter, the new monk gets to his feet and shouts: “Twelve!”. No response. Not even a chuckle. Complete silence. He sits down. “Why didn’t they laugh?” he asks. His new friend breaks it to him: “It’s the way you tell ’em”.

I was in a meeting recently with an team of accountants working in accounts payable. I felt like the novice monk. I just didn’t get what was so important about differentiating between Opex and Capex in the balance sheet and why using 3004 instead of 3005 sub-ledger was going to give an inaccurate trial balance at the period end. Or at least I think that’s what they said. The problem is, accountants love talking in jargon. And they’re not alone.

All professionals do it. It’s not just a more efficient, and often more accurate, way of communicating to colleagues. Being adept at the use of jargon gives us some status. It tells people that we know what we’re talking about – that we’ve been around the block a few times. And it gives us a sense of belonging – a sense that we are part of the clique. If you don’t understand the jargon you’re not one of us. We’re even amused when outsiders don’t understand what we’re talking about and we can abuse jargon to baffle people. Abuse to confuse. Blind them with science. And this is why jargon – or the use of technical language – is one of the biggest problems in Purchase to Pay where there’s often lots of talk but very little communication.

Purchase to Pay

The fundamental challenge in implementing purchase to pay is to successfully span disparate parts of a commercial organization. Purchasing and payables are traditionally entirely separate. They have different day to day concerns, different pressures and issues and very different language. It’s nearly always “us and them”. For an accountant, explaining to a buyer the importance of accurately recording the sub-ledger coding on a P.O. is like trying to teach a dog how a can opener works. He doesn’t know what sub-ledger means. He doesn’t want to know. Even if he does know he’ll deliberately unlearn it so he doesn’t know it any more. Why should he know? That’s payable’s job!

Who’s to blame for this disconnect? Procurement or Payables? It’s both. But not because they’re both wrong. They’re both right – it’s the language they use. Getting the fundamentals of purchase to pay right – developing shared responsibility for getting things right first time; making sure that the right suppliers are used and the right pricing; making sure that the suppliers buy in to the correct ways of working; getting P.O., invoice and receipting data right – it doesn’t just save the organization money, it frees up resources to allow people to behave more strategically.

Disconnects in business provide distraction and constraint and the most powerful method of removing them is to learn a common language and begin to communicate instead of just talking.

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