10 Reasons for Procurement to Work With Payments (Part 3)

Closing the payment gap – not just the invoicing gap – remains a Holy Grail for procurement organizations looking for greater oversight and control in transactional purchasing and even supplier relationship management. It’s also a means to bring finance and procurement organizations closer together – and to prove that finance is really procurement’s ally in the struggle to wrestle the maximum amount of utility out of P2P programs together, rather than separately. As my colleague Pierre Mitchell has noted, “any land grab is usually about job security built upon the pillar of bureaucracy.” In other words, finance and procurement must really be in the payables thing together.

The 10 reasons for procurement to work with finance departments are:

1. The value of control and oversight of the end-to-end transaction with suppliers
2. Building greater invoice/transaction insight that can bridge the visibility gap in getting line-level detail to supplier invoices without having to request information from suppliers
3. Being able to quantify efficiency driven metrics through a Trojan Horse adoption approach to e-invoicing
4. Reducing supplier risk
5. Capturing savings/leakage through closing the transaction, invoice and payment loop
6. Not getting taken advantage of by vendors that hide the total cost of P2P implementations by masking the amount suppliers are charged
7. Flexibility on supplier engagement/fee assumption in the case of supplier network models
8. New securitization/capitalization opportunities (e.g., securitizing the discount of forward payables through converting the discount classification to revenue)
9. Effectively addressing payables also forces addressing the “payment clock” question as early as possible to capitalize on opportunities.
10. Create powerful “information exhaust” around the optimal means of engaging with suppliers on a total cost basis – beyond just reducing risk. This not only includes capturing additional discount opportunities through payment integration, but also understanding how and when suppliers (and different groups of suppliers) are taking advantage of different payables opportunities.