ASIA FINANCE
finance
procurement
How to fix the relationship between finance and procurement Procurement and finance teams have a lot in common. In fact, procurement can trace its origins in finance. However, as the process for buying goods and services has matured, the relationship between these two functions can often become strained, and this is something with the potential to affect businesses across the world. A popular theory about the tension between the two functions stems from finance’s continued insistence that procurement should be under its control. Indeed, as procurement is there to ensure money is spent well, surely that must be finance’s jurisdiction? In this article, we’ll be looking at ways to stop any bad blood between the two departments, using data from a recent Wax Digital survey to support our findings.
46 | Issue 16
Finance and procurement spending in summary Finance has an important role to play when considering its relationship with procurement and a healthy business. They set spending limits for departments, business units and so on, and then, procurement finds ways of saving money through cost savings and cost avoidance measures. Procurement typically manages this by leveraging purchase-to-pay systems, to link together ERP and purchasing systems – from purchase requisition, all the way through to invoice processing. This helps to centralise and automate many elements of purchasing, delivering the spend visibility needed to spot potential efficiencies (to the adage of you can’t control what you can’t see).
Once purchasing is complete, finance pays for the contracts that procurement has negotiated using a process called three-way matching. This is used to make sure the items ordered are what they received, and what the company needs to pay for. What do finance and procurement think of one another? In our recent CPO Viewpoint 1 study, we surveyed finance, procurement and marketing professionals in over 200 companies about their relationships with one another. The survey found that 66% of finance professionals believe that procurement teams are a hindrance to the overall objectives of their business. In fact, further data from the study showed that only a third of finance respondents feel that procurement actually helps