Often when we talk to shared services professionals we hear how finance and procurement are at odds with each other. If suppliers aren’t being paid on time, procurement often blames AP, And AP often blame procurement for not following process.
Why it is so hard for organizations to align finance and procurement? Surely they should be working towards the same goals: buying from the right suppliers at the right price, and paying the right suppliers the right amount at the right time.
We do hear from some organizations who have aligned finance and procurement under one reporting structure, we wonder why more people aren’t doing this.
ING is one company who has brought finance and procurement under one reporting structure. Earlier this year, James McDonald Director of Operations at ING US spoke at our Summit for Leaders in Finance Shared Services on how they aligned finance and procurement, and the results they were able to achieve. ING went from having decentralized AP and unmanaged Procurement, to organizing source to settle into 3 groups, all reporting into the CFO, and all working in alignment with each other.
James McDonald said, “Integrated and centralized procurement and accounts payable organization is the most effective way to manage spend, manage suppliers and facilitate process efficiency”
Through restructuring and using Ariba as an enabling technology:
• 78% of PO-related invoices are pure electronic
• AP FTEs have dropped from 35 to 8 since introducing Ariba, centralized AP and managed Procurement
• 330 suppliers are on the Ariba Network utilizing e-invoicing
• P-card usage now comprises 58% of invoice volume and 14% of spend through the use of various Pcard programs including one fully integrated into their catalogs automated PO program allowing forauto-reconciliation
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