Accounts payable (“AP”) and treasury can and should be natural partners within the average enterprise. AP manages a significant source of cash outflows in the form of supplier payments, and treasury is tasked with managing the organization’s cash position and liquidity risk. On this point, the duties of treasury and AP neatly intersect, which makes it only reasonable that greater levels of collaboration between the two should be a foundational component of any solid financial management strategy.
Moreover, the shifting roles of treasury and AP have forced the functions to look outside of their traditional areas of focus to develop new methods of ensuring that they can achieve department-level goals as well as align them with enterprise-level priorities. As part of that innovative approach, as well as driving strategic value (via intelligence and other forms) to the wider enterprise, below are three key ways that AP and treasury can and should collaborate:
- Developing and implementing a supplier payment strategy. The supplier payments that AP manages are a significant cash outflow in many enterprises. Because of this, AP and treasury should work together to create an efficient strategy for how and when these payments are executed. Treasury provides insight into the enterprise’s cash position, which allows AP to more intelligently schedule supplier payments. The added visibility into enterprise cash would also allow AP to align payments with the enterprise’s larger working capital goals. This collaboration has the additional benefit of richer financial forecasts, which allows for more nuanced decision-making.
- Collaborate on financial planning, budgeting, and forecasting. Beyond creating more nuanced financial forecasts, including AP in the financial planning, budgeting, and forecasting process can help AP intelligently schedule supplier payments and provide required data when and where it is needed. Treasury also has access to copious amounts of financial data from across the enterprise, and sharing this data with AP can lead to better decision-making and more intelligent strategies.
- Working in unison on technology positioning.. Treasury can greatly benefit from AP-sourced data … but only if they have access to this information. The accounts payable function must depend on the treasury unit, which often has higher strategic positioning within the executive boardroom, to facilitate the allocation of more time and resources, specifically to foster an investment in automation and other forms of technology. A more well-oiled, and, particularly, seamless, AP function can truly boost the ultimate value of treasury-led collaboration.
Final Thoughts
Both accounts payables and treasury seek to maximize their strategic impact to the greater organization, proving that collaboration between these two units will build on their very similar goals and objectives. Treasury possess the financial insight to place AP’s payments activities into a broader context, while AP holds the key to the payment data that treasury requires to build more nuanced forecasts and improve fiscal planning. The combination of these two business units is vastly more potent than its constituent pieces, and the advantages enterprises can when these two functions cooperate and collaborate can be transformative.
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