Much has been in the news lately about what happens when two groups cannot, or will not work with one another to solve (major) pressing issues. Most of us are familiar with the saying “Teamwork makes the dream work” by John C. Maxwell, internationally recognized leadership expert, coach, and author. In business, as in politics, this saying is equally applicable. Collaboration, communication, negotiation, and compromise are all essential for creating win-win results.
Andrew Carnegie, the renowned Scottish-American industrialist and philanthropist, said “Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.” At Ardent Partners, we have long written about the importance of collaboration and teamwork as they apply to Accounts Payable (AP) and the entire financial supply chain. Without collaboration, organization-wide success is impossible.
Historically, AP operated in a business silo. But over the last few years we have seen a dramatic shift in the position and role that AP has within the organization. The objectives of today’s AP departments continue to grow and expand in scope and drive. With business processes and functions converging around shared value and shared interests, AP sits in an exciting position to impact the business processes, relationships, and results for an organization. For most AP groups, one of the essential elements for the success of their department lies in improving the amount of collaboration with the other key stakeholders within the organization. Working with groups like procurement for sourcing and spend management improvements, or treasury for enhanced cash management, goes a long way in enabling AP to add value, and position the organization for ultimate success.
Collaboration with Procurement
The level and quality of AP and procurement collaboration varies dramatically among enterprises in the marketplace today, which means that more agile organizations are effectively using their procure-to-pay operations as a competitive weapon to gain an advantage over their rivals. Organizations that lack a seamless P2P process typically see an erosion of value as they move across the entire process. Those that are more successful combining processes, systems, and organizations report a series of benefits that includes:
- An ability to optimize working capital across the P2P process by developing proactive payment strategies and pursuing dynamic discounting opportunities.
- Improved supplier relationships. This is aided by an ability to pay suppliers on time (or early) and accurately as well as better data to support improved inquiry response times.
- More accurate spend data via invoices and payments; and in turn, better identification of sourcing opportunities through more accurate spend data via invoices and payments.
- Improved contract compliance and the reduction of maverick spend by linking invoices and payments to contracts.
- Better success with supplier enablement by leveraging a ‘one-time’ on-boarding process for procurement and AP requirements.
Treasury & Cash Management
In many ways, the goals of the AP and treasury departments are quite similar. Both groups want to maximize their strategic value to the organization and drive cost savings as well. Collaboration between AP and treasury is a no-brainer. There are significant possibilities for AP to have a major impact on treasury’s working capital goals and improve the financial performance of the enterprise. For instance, by working closely together, aka collaborating, AP will be able to provide better visibility into the data needed for treasury’s cash forecasting.
AP is slowly becoming a more value-added department within the wider enterprise, and most leading organizations rightly see the AP team playing a larger role in finance-related tasks through the supplier payment activity that goes through AP every day. With its role as one of the largest cash distribution functions within an organizations, AP is in a position that treasury should be collaborating with if they want their organization to remain competitive in an increasingly challenging business world.
Summary
250 years ago in 1768, John Dickinson, founding father of the United States, wrote: “By uniting we stand, by dividing we fall!” Those words are as true today as they were then. In politics, as in business, collaboration and teamwork are essential for achieving success. To achieve real, sustainable benefits, all sides must work together for the greater good. For AP in particular, collaborating with functions like procurement and treasury will put the unit in the best position to provide added-value to the enterprise and become more strategically aligned with the greater organization.
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