My answer to the above question is, “They should.” Yet, more than one person has recently told me that the procurement team limits their focus to supplier selection and negotiating low prices. They view payments as something accounts payable handles. Such thinking is narrow minded since payments begin with the terms and conditions in supplier contracts and purchase orders. Perhaps an interest in payments only surfaces when the procurement department manages the card program. However, whether they like it or not, “purchase” and “pay” go together. Following are things both management and procurement should do to contribute to organization success.
What Management Should Do
Regardless of which department administers the card program, management should demonstrate leadership by doing the following.
Clearly identify the roles and responsibilities of procurement and AP related to internal purchase-to-pay (P2P) processes.
Communicate their expectations for how the two departments should work together to effectively execute the organization’s P2P preferences.
Hold employees accountable.
Establish quantifiable goals for reducing check payments through increased card usage.
Support continuing education in the P2P space, directing employees to pursue topics that could help the organization more quickly achieve its goals.
What Procurement Should Do
Speaking from my experience as a former procurement person, the following actions help raise the profile of the department in a positive way.
Actively work toward exceeding management’s expectations. This could include proactively expanding the team’s knowledge about electronic payments, particularly Commercial Cards. Invite the card program manager to deliver related training to procurement staff.
Make it a standard operating procedure to address card acceptance in competitive bids and contracts.
Meet with each internal “buying department” on a regular basis to: discuss that department’s suppliers and the applicable P2P process, inquire about competitive bids that need to be done, and educate them about the organization’s card program.
Monitor adherence to contract terms concerning payments. If there is a problem, respectfully work with the buying department, AP, and/or the supplier to get things back on track.
Even if management does not take the initiative to unite procurement and AP, these two departments should take it upon themselves to work together on P2P processes. Driving organization success means department and employee success.
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About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…