08 Jun 2011 Delivering synergy by taking a step back
Holistic P2P delivers synergy but you need to take a step back to see how. By embracing the whole of the end to end process across finance, procurement and the supplier’s organisation, benefits can be unlocked that remain hidden when these elements operate in isolation. Apparently unconnected projects within the purchase to pay spectrum can be joined together to deliver better results. The following examples illustrate the point.
Supplier master data management and e-invoicing
The management of supplier master data – names, bill-to addresses, delivery addresses etc. is a fairly routine operational matter. It’s often undervalued and under resourced leading to duplicate, out of date or incorrect records. Yet by taking a wider view, investing in good supplier master data can pay for itself many times over by looking at the effect it can have on an AP automation programme. Accurate supplier data can dramatically increase the straight through processing rates for scanned invoices where intelligent data capture is employed.
E-procurement and accounting rules
There’s a perennial headache in finance concerning the correct allocation of spend. Purchasing people have little knowledge of the importance of correct allocation of spend in the general ledger and sub ledgers and neither should they but incorrectly coding capital expenditure as operational of attaching the wrong GL code can have a very serious impact on an organisation. Where an e-procurement system is managed within the procurement function, inviting finance colleagues to play a central role in the design of product hierarchies and categorisation can eliminate time consuming and expensive reworking within finance.
Accounts payable and supply relationship management
Too often, a strategic relationship with a supplier at a procurement level is frustrated by an entirely separate and dysfunctional relationship at a payment level. It easy for purchasing to blame finance when invoices don’t get paid and in the worst cases it can escalate to a point where supplies are halted. But the reasons for delayed payment are often complex and the root causes can be found in any places. Incorrect or missing P.O. details on the invoice, poor receipting processes within the business or shortcomings within accounts payable – they can all contribute. For commercially critical suppliers in particular, joining up the purchasing and AP with the suppliers’ account management team and accounts receivable to ensure there is constant visibility of payment issues and their roots causes, helps to reduce the number of issues and can eliminate commercially disastrous escalations.
This article is an extract from our white paper “Holistic Purchase to Pay” available for free download here