Procurement and accounts payable collaboration

Accounts Payable Teams are an important stakeholder for Procurement.

Accounts Payable Managers are finance professionals who are expert in problem solving, stakeholder engagement and conflict resolution with teams that span the entire organisation.

It is a smart choice to consult their wealth of experience to develop strategies that look at the total cost of buying, the customer experience and the supplier experience.

Accounts Payable colleagues help Procurement teams to honour the contractual commitments made to suppliers around payment terms. Suppliers are more likely to view us as a customer of choice when we:

  1. Pay on time.
  2. Protect them from exposure to fraud or unethical practices.
  3. Help them to resolve payment queries quickly.

As Procurement Professionals, we invest a lot of time in developing strategies for our categories, sourcing projects and supplier relationships.

It is crucial that each of these strategy types give careful attention to the Source to Pay process. The cost of poor quality (COPQ) to the buying organisation in this area could include the consequences of contract breach, good and services not being delivered and reputational damage.

When Procurement professionals create strategies with internal Procurement influencers, Accounts Payable are important stakeholders. Like budget holders, specification owners and supplier managers, they give us the parameters for what is desirable, practical and possible. They understand the implications of payment mechanisms in terms of the total cost to the business and the impact on customer and supplier relationship quality.

The payment mechanisms that we put in place may be very different depending on your strategy objectives. For example:

  • Strategies may reflect organisational working capital initiatives. E.g. lengthening payment terms.
  • Strategies may reflect a requirement to gain goods or services at short notice or with short lead times from niche SME vendors with low capacity. E.g. reducing payment terms.
  • Strategies may reflect a financial performance incentive negotiated with a supplier so that your business is prioritised to receive urgent goods or services first. E.g. adjusted payment values.

Given this range of outcomes, Accounts Payable Managers are the right experts to consult to ensure a joined-up experience for internal stakeholders and suppliers.