Aligning Finance and Procurement — Phase 3: A path to collaboration

In our In-Depth Guide, we introduce our series which is based on the critical roles finance and procurement play in shaping an organization’s financial health and operational efficiency. Each function’s objectives often overlap, particularly in areas such as financial reporting, cost management, budgeting and data-driven decision making, so when procurement strategies align with finance-led initiatives, organizations gain greater financial visibility, improved efficiency and stronger risk control.

Following on from Aligning Finance and Procurement — Phase 2: Identifying misalignments and addressing the gaps, this article looks at the steps CPOs can take to work better with their counterparts in Finance.

A path to collaboration

Bridging the gap between finance and procurement requires more than just recognizing misalignments; it demands a structured approach with shared objectives, clear responsibilities and integrated processes. Without this, procurement’s financial impact may go unmeasured, while finance may lack visibility into supplier costs and risks.

A strong framework aligns procurement with financial strategy, embedding spend management, supplier insight and cost-saving initiatives into financial planning and decision making. By defining shared KPIs, integrating data and leveraging technology, Procurement shifts from a cost-focused function to a key financial enabler.

Structuring the approach

At the core of this approach  are two fundamental pillars:

• Aligning CFO and CPO priorities through shared KPIs — Common performance metrics ensure that procurement’s contributions are measurable and visible in FP&A processes. FP&A acts as the bridge, connecting procurement-driven savings, supplier risk management and category strategies to financial reporting and decision making.
• Integrating Procurement into financial planning and budgeting — Early procurement involvement in FP&A-driven budgeting improves forecast accuracy, cost control and cash flow planning, preventing last-minute budget adjustments.

With these foundations in place, organizations can move from conceptual alignment to a structured, data-driven Finance-Procurement partnership.

A step-by-step framework to guide alignment efforts

A structured alignment approach should follow a consulting-style methodology, ensuring that finance and procurement collaboration moves from tactical execution to strategic integration. The following steps outline a clear delivery path, including problem identification, pain point analysis, solution assessment, technology evaluation and implementation planning.

Step 1: Define the problem — Why does the misalignment matter?

The first step in structuring alignment is clearly defining the issue and understanding why it matters to the organization. This includes:

• Assessing how finance-procurement misalignment impacts cost control, forecasting and risk management.
• Identifying gaps in financial visibility, budget adherence and procurement’s role in financial strategy.
• Determining the enterprise-wide consequences of inefficiencies in procurement-finance collaboration.

A well-defined problem ensures that teams address the root cause of alignment, allowing them to focus on long-term improvements rather than temporary fixes.

Step 2: Identify the pain points — Where are the key challenges?

Organizations must pinpoint the root causes of finance-procurement misalignment by analyzing:

• Late Procurement involvement in budgeting and planning.
• Gaps in supplier cost forecasting and savings validation.
• Disconnected KPIs that prevent procurement from influencing financial outcomes.

Identifying the key pain points helps leadership prioritize the most impactful areas for improvement to measurable financial and operational benefits.

Step 3: Analyze current solutions — What is working and what is not?

Once challenges are identified, organizations must assess how existing processes, systems and collaboration mechanisms address — or fail to address — them. This includes:

• Reviewing procurement’s role in financial planning and reporting.
• Evaluating whether spend tracking aligns with financial reporting systems.
• Assessing procurement-finance integration in budgeting and forecasting processes.

A clear assessment of current solutions provides a foundation for targeted improvements that leverage what already works while addressing key gaps.

Step 4: Defining a technology adoption strategy — Research, alignment and strategic planning

Technology plays a crucial role in bridging procurement-finance misalignment. Organizations should:

• Assess the current state of Procurement-Finance technology integration.
• Identify gaps where technology solutions could improve efficiency.
• Determine which tools best support procurement’s role in budgeting, reporting and financial analysis.

The right technology enhances transparency, improves decision making and ensures that procurement’s financial impact is fully visible.

Step 5: Provide a roadmap for implementation — What actions should be taken?

The final step involves building a step-by-step implementation plan. This includes:

• Establishing governance mechanisms for Procurement-Finance collaboration.
• Defining new processes for savings validation, budget alignment and supplier risk integration.
• Implementing real-time reporting systems to track procurement’s impact on financial outcomes, including aligned KPIs that measure cost savings, budget adherence, supplier performance and risk mitigation — ensuring both functions have visibility into shared goals and measurable results.

A structured implementation plan creates lasting alignment by embedding collaboration into everyday operations.

Key insight

A structured, consulting-style approach moves the Finance-Procurement alignment beyond reactive fixes to a sustainable, data-driven strategy. By following a clear problem-solving methodology, integrating technology-driven solutions and prioritizing initiatives based on value potential, organizations can establish a financially resilient, strategically integrated procurement function that drives long-term business success.

Next up

Look out next week for: Phase 4: Leveraging technology to bridge the Finance-Procurement gap.

Visit our  ‘Aligning Finance and Procurement’ in-depth guide for practical, structured advice on enhancing finance-procurement alignment.

Read also our use case scenario ‘Aligning Finance and Procurement for cash flow and liguidity.’
Phase 1 – Understanding the Foundations is here.