How Leading Companies “Unlock The Full Potential” of P2P
There are various types of procurement to payment (P2P) models that many times depends on the size of your company. Instead of having 2 separate processes, research is showing the benefits of the Procurement and AP departments partnering to achieve reduced costs and a more streamlined process.
Below is an article from theaccountspayablenetwork.com that describes some of the best practices to promote a more cohesive partnership between procurement with Accounts Payable. After reading the article, give us a call at SpendBridge so we can partner with you to create a better Accounts Payable and Procurement process at your institution improving your cost savings.
Source: theaccountspayablenetwork.com | Re-Post SpendBridge 3/7/2018
Most organizations run P2P in two separate silos: Procurement is responsible for selecting and negotiating terms with vendors and then ordering goods or services from those vendors. And then the purchase gets tossed over the wall to AP to pay for it.
At very small organizations, this distinction is blurred. Procurement and AP may be done by the same person or by two people who sit near enough to each other to naturally work together. But as organizations grow, these silos become hardened barriers.
In mid-sized and larger organizations, procurement and AP tend to report to different people, in different parts of the business. Both functions define success differently and are measured by different — and sometimes conflicting — performance measures.
And it’s this broken relationship that is responsible, at least in part, for why most P2P processes leave significant savings on the table, according to David Schannon, a Bain & Co. partner, who focuses on performance improvement and procurement.
By better integrating procurement and AP, truly running them as parts of a single process, he says companies can cut the cost of their annual external spend by between eight to 12 percent. And for those that continue to link procurement and AP and work to change the silo culture, additional savings of two to three percent can be generated every year.