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28

Apr

Procurement and Finance: The Relationship You Shouldn’t Ignore

Author: Avetta Marketing

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Procurement and Finance: The Relationship You Shouldn’t Ignore 

Traditionally, the procurement and finance departments within a business are separate, working alongside each other rather than together. For the most part, this works, but is it the most efficient and effective way to handle purchase operations? It’s not, and here’s why. 

By treating the two departments as a healthy, functional relationship where goals align and achievements are made together, you’ll see some amazing outcomes. 

The Benefits of a Procurement and Finance Partnership

Partnerships are typically formed for a strategic advantage. Think of Mr. Procter and Mr. Gamble, Mr. Wells and Mr. Fargo, or Mr. Hewlett and Mr. Packard. Working together, these successful duos were infinitely more successful than either partner could have been on his own. In short, they each saw vast improvements in business performance and stellar gains in competitive advantage because they were partners.

Likewise, a procurement and finance partnership brings similar benefits, namely:

  • Higher savings

  • Deeper insights

  • More informed decisions 

  • Better forecasting

  • Faster processes

  • A boost in productivity

  • Accurate reports

  • A jump in innovation and growth

How can all of this be? The answer is collaboration. Imagine both departments having instant access to up-to-the-minute information at every stage from approval to receiving and payment. Procurement and finance can each see purchase order and invoice status, finance can secure discounts, and procurement can establish supplier relationships. This cycle both saves money and provides high-quality goods. Everyone wins.

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8 Ways Procurement and Finance Can Work Together 

There are some surefire ways to facilitate a good procurement/finance partnership. Here are eight that you should consider:

  1. Demonstrate achievements to each department, showing off the positive impacts of choices.

  2. Establish clear parameters to better facilitate collaborations, based on each department’s strengths.

  3. Consider each other’s points of view to foresee issues and find acceptable solutions rather than focus on only one perspective. 

  4. Agree on reporting standards and terminology to decrease confusion and disagreements.

  5. Set goals together to avoid unrealistic expectations. 

  6. Understand the nuances of inventory and develop a balanced approach that allows for better operations management and capital strategy, even through interruptions in supply and spikes in demand.

  7. Discuss short-term and long-term strategies for any cash flow issues that may arise.

  8. Incorporate procurement software that integrates seamlessly to increase visibility,  reduce lead time, improve efficiency, mitigate risk, and maximize data quality.

 

10 Questions to Ask for Better Collaboration  

To help overcome obstacles that may stand in the way of a collaborative partnership, ask the following questions of each other before getting too far along:

  1. Is senior management supporting and engaging in the efforts for collaboration?

  2. Are there any other departments that create kinks in the workflow?

  3. In what ways can communication shortfalls lead to errors?

  4. What education and training can we offer each other?

  5. Where are the blind spots in spending?

  6. Are there adequate redundancies to protect against interruptions and risks?

  7. What are the outdated methodologies or practices that are holding us back from higher efficiencies?

  8. In what ways can shared access to data allow other teams to improve their management?

  9. How do we want to standardize processes, including collecting, monitoring, accessing, and sharing data?

  10. Are there any procurement software tools that are necessary for helping us attain our goals?

 

Learn More About Procurement Software

Since procurement teams face significant challenges every day, including finding and qualifying suppliers, monitoring their performance, and constantly having to lower costs, it can be difficult and overwhelming to fit all the moving pieces together. Fortunately, there is an answer for procurement managers.

Procurement software is designed to:

  • Source and pre-qualify suppliers and vendors

  • Manage documents

  • Audit

  • Track training

  • Verify insurance

  • Offer business intelligence

This is all done using cloud-based technology and expert insight. The advantage is significantly lowered costs in the end, which makes everyone happy.

If you’re ready to consider incorporating procurement software into your procurement process, schedule a demo to see Avetta in action today.

To learn more about the benefits of a procurement and finance partnership visit our website, call 844-633-3801, or email blog@avetta.com 

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