Collaboration between procurement and finance: how do you optimize your processes?

Putting your hands together! What does a good collaboration between procurement and finance yield?

While procurement focuses on getting products and services with value for money, finance is responsible for ensuring a healthy financial business situation. It is not difficult to see the connection between the two departments. Finance monitors the company’s financial status quo and procurement makes decisions about suppliers and contracts. It is helpful if these teams join forces and optimize their joint processes as best they can. Why? We’ll discuss two main reasons.

1. Fast insight into expenses, income and any deviations

The purchasing department is in direct contact with suppliers. It negotiates prices and terms and makes decisions that are critical to operations. The finance department ensures that these decisions are properly recorded. This is essential, because you need to properly record, verify and book all business expenses. This creates a clear overview that makes it easier to see where savings can be made and how to manage budgets optimally. You also reduce errors – duplicate payments and lost invoices are much less common. If you process purchase order confirmations at the beginning of the process, you can also identify any discrepancies early on. Think of price differences and unexpected extra costs. If the finance department notices these almost immediately after the order is finalized, there is quick insight (and you can quickly complete any additional tasks!).

2. Healthy financial situation

Creating and maintaining a healthy financial situation is important for the continuity of a business. Therefore, the average finance department wants to accurately record all financial actions. It records every transaction and closely monitors budgets. The link to procurement is obvious: after all, this department purchases products and services. So it must compare suppliers, negotiate contracts and monitor deliveries. When the two teams work together, they can ensure that the company operates efficiently financially. It is easier to avoid unnecessary costs and anticipate financial challenges. Thus, they contribute significantly to a stable – and therefore healthy – financial situation.

Which processes could use an optimization effort?

Several processes could be improved. For example, you can optimize the process described above around processing order confirmations. How? By automating it, bringing forward the signaling of any discrepancies. Another crucial process involving both departments is purchase invoice processing. Traditionally, this is time-consuming and error-prone: the more manual operations you perform, the more inefficient the process. If you process invoices (partially) manually, this results in problems such as over-typing errors, delayed approvals, lost invoices and delayed payments. Again, automation is the solution. With a smart solution, you reduce manual operations to a minimum. You save time, reduce the risk of error, increase transparency and create a clear financial overview. When both departments optimize the essential purchase invoice processing process, they can streamline things much better. We list the benefits for you!

• Work more efficiently Less manual repetitive work means more time for challenging tasks. Employees become happier as a result and add more value to the organization.
• Better decision-making When both departments have financial insight and oversight, they can optimize the decision-making process regarding corporate spending.
• Fewer mistakes A human error is easy to make, especially when you spend hours retyping data. A smart total solution recognizes invoice data at lightning speed and relieves you of this repetitive task. And an invoice-matching platform makes it much easier to detect and eliminate errors because the software automatically alerts you when the purchase order does not match the invoice.
• Cost savings When you minimize human error in financial transactions, you avoid many additional costs (including penalties for late payments).

Optimizing collaborative processes? Here’s how to do it!

Printing out an invoice, retyping it and circulating it (by e-mail or even manually) to collect the necessary signatures: you want to improve that process. That way procurement and finance can work together and move forward at full speed. If you carry out optimization thoroughly and choose a reliable total solution, you can set up paperless administration. For this you need a smart solution (to recognize invoices), but also good workflow software (to approve invoices). Additional functionalities, such as a matching module for automatically processing order confirmations, often come in handy as well. How do you find the solution that suits your organization? Ask yourself at least the following questions during your search:

1. What condition must an automation solution meet to optimize cooperation between our finance and procurement departments?
2. What is the right balance for us between quality, price and speed?
3. Does the software interface with our ERP system? And if so, do the two vendors have a solid partnership?
4. Is the solution provider reliable and does it understand our organizational needs – short- and long-term?

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