Aligning Accounts Payable and Purchasing

Spend Matters welcomes this guest post from Hadi Chemaly, a senior product manager at Verian

Every business strives for a perfect world where accounts payable (AP) and purchasing work in perfect harmony, overcoming different policies and processes.

Like most worthy goals, reaching this perfect world is easier said than done. It is common to have AP and purchasing report up to different division managers. These divisions often have different philosophies in handling supplier relationships as well. This creates friction and tension between the two teams, and in extreme situations, results in unhealthy organizational rivalries.

So what needs to happen for AP and purchasing to align? Regulations have already helped address this issue in the form of Sarbanes-Oxley. This has forced companies to deal with issues both AP and purchasing have known about for years:

  • Inconsistent supplier master data setup
  • Poor communication to resolve issues
  • Frustrating invoice errors
  • Overlapping AP and purchasing roles that create conflict
  • Late payments to suppliers that dilute discounts negotiated by purchasing
  • Off the record purchases off the purchasing radar

Sarbanes-Oxley is a good start but more can be accomplished. Here are 10 best practice ideas around policy, process and organization you can use to improve AP-purchasing harmony. These ideas are based on real results from productive AP-purchasing relationships:


  1. Adopt a “no PO, no pay” policy:  This will be challenging. It can also be impractical at first, but the benefits of implementing policies this serious will payoff in the future. Proper planning is required as well as employee/vendor education campaigns, discipline and executive sponsorship.
  2. Block buyer access to invoices / Block AP from issuing POs: Do NOT allow buyers to approve invoices or issue payments for purchases ordered. Flip the coin and the situation is the same, you cannot have AP place orders they can quickly approve on their own.
  3. POs must be accurate and complete: The purchasing group must be held accountable for bad data on the PO. Most invoice errors can be tracked back to an incorrect or incomplete PO, and holding your purchasers to a higher standard can eliminate this problem.
  4. Align purchasing activities with cash flow goals: Take a prudent purchasing approach depending on cash flow. For example, revert to smaller incremental purchases at higher unit price when cash is tight, even if demand is high.
  5. Resolve pricing and receiving discrepancies through purchasing: Requesters, buyers and receivers are better positioned to track down discrepancy facts. Having this group resolve these issues is much more efficient and can save time. AP should only mediate as needed.


  1. AP to hold their purchasing related questions till day's end: This works naturally great in centralized purchasing environments, and can be made to work in a decentralized one using tools to properly dispatch questions. Enforce a 24-hour turnaround. This ensures AP gets their answers without causing distractions and irritations in purchasing.
  2.  AP should inform purchasing of payment holds and invoices past due ASAP: Purchasing generally owns supplier relationships and needs reasonable heads up to proactively take the news to the supplier and do damage control as necessary. The last thing a buyer wants is to be caught off guard by a vendor call asking for payment.
  3. AP should inform purchasing of spend outside vendor contracts: This is also known as maverick spending. AP should report all non-PO to purchasing, reimbursable and P-card activity by vendor, item category and line-item details if available. Identifying and addressing these will put more spend under control and help negotiate more favorable contracts with suppliers.
  4. Share monthly reports with executives on key metrics: Don't assume everything is going well if management is not asking for these reports. Agree on key metrics to report on, keep executives informed of departmental performance and looming issues.
  5. Agree on a process for setting up new vendors: AP and purchasing must work from a unified, agreed upon vendor master list, free from duplicates, and always up to date. AP can take ownership of maintaining that list, and hold purchasing and business unit managers accountable for adhering to it.


Executing these best practices will show you time and again how aligning AP and purchasing is more realistic than you ever thought.

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Voices (3)

  1. Pierre Mitchell:

    I sort of agree B&T, and it sort of happens this way at best companies (with data to back it up). To paraphrase Monty Python, “let’s not bicker and argue about who reports to who”. Procurement should own P2P and P2P is ‘just’ the execution of supplier/category management in S2P (which procurement also should own). Biggest thing is common KPIs and process accountability. Even if they report separately to make auditors happy, AP must support the end-to-end process and support procurement (and vice versa). And ‘no po – no pay’ is not the answer for all spend.
    If a firm can’t master the ability of properly managing a straightforward cross-functional process like P2P, then it likely has bigger problems.
    Besides, the invisible hand of eInvoicing and advanced analytics will eventually turn most of A/P into a lights out operation.

  2. bitter and twisted:

    Don’t align, abolish:
    Give payments to Purchasing,
    Finance and Purchasing collaborate directly on cashflow, strategy etc.
    An independent witchfinding dept. roots out fraud.

  3. B+t:

    i disagree. Make payment part of purchasing: have Finance directly collaborate regarding ROI, cash flow , strategy etc; have an independent witchfinding department to fight fraud (as traditional AP couldn’t catch a cold)

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