5 Keys to Powerful Alignment of AP and Procurement

A viable Accounts Payable and Supply Chain collaboration can strengthen cost management, reduce process complexity, minimize the risks associated with routine transaction processing and enhance vendor contract compliance. With a range of 1 percent to 5 percent of value lost to duplicate, unearned, out-of-term, and fraudulent payments, the value proposition is from $1M to $5M for every $1B in trading partner payables.

Let’s look at where we need to start to set up collaboratively managed AP and Supply Chain accountabilities, processes, and metrics.

AP and Supply Chain share a stake in oversight of payment to contract term value. Together Ap and Supply Chain are accountable for a number of trading partner value drivers. It stands to reason that aligning these two stakeholders makes sense. The alignment creates a shared need and focus on the 5 keys to powerful alignment of AP and Supply Chain.

Key #1: Creating and maintaining paperless procurement and invoice processing environments, and collaborating on the elimination of manual processes.  

Key #2: Maximizing the number and variety of electronic transactions. From EDI order management, catalog and price list transactions, to EDI invoicing and remittance.

Key #3: Co-managing portals for client process visibility. Electronic requisitions, punch-out to vendor on-line catalogs, electronic invoice approval, recurring payments, etc.

Key #4: Cooperating on identifying periodic accruals. Forward buys, receipt accrual management, invoiced-not-received and received-not-invoiced, and deposits against days sales for increased discounts.

Key #5: Audit controls… Corporate procurement creates chaos. In the midst of that noise lives the possibility for vendor or even employee fraud. When AP and Supply Chain share strong collaborative management of the three-way matching process, and for non-po payment the invoice approval and coding process, you create a powerful tool to assure you are only paying for products that were ordered and received as expected.

Working together on key accountabilities, Accounts Payable and Supply Chain create new value through favorable trading partner terms, setting up clear management processes, and consistently tracking key metrics to support stronger liquidity and bottom-line results.

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