Access to cash remains a continued priority for finance and procurement chiefs. The way to make businesses more agile through better availability of funds is by having a more collaborative relationship between procurement and finance – from the top down.
Many of the answers lie in the use of more effective technology, linking together supplier information to strengthen negotiation. But it’s not just technology. Finance is from Mars and procurement is from a different part of Mars. Despite the links between the two, there are two different languages and distinct circles of influence.
Because of this, CFOs and CPOs need to do a couple of things in order to succeed in this collaboration. Ultimately the CFO can’t be successful unless he can reduce expenditure, and the CPO can’t get better deals without more effective financial processes.
When I speak to finance and procurement directors, I find some are on the same page and some operate in vacuums. In my experience those who have the greatest collaboration in procurement and financial terms get to that point by sharing many of their basic processes.
The CFO at one of our clients recently told us he simply does not establish quarterly goals without his CPO in the room. For them to work together effectively, they need to have shared goals and report back in to those targets in a coordinated way. This means that whatever direction they’re going in, they always come back to the same benchmarked objectives.
We have seen too many CFOs and CPOs who make their own plans and then – maybe - talk about how they can make them work together. This is the wrong way round.
Examples like our client show the benefits of starting out with the same objective and then spreading out into their respective departments. This advice is regardless of a company’s set-up; it could be a CFO and CPO or a CFO and director of procurement, the lesson remains the same.
☛ Andrew Jesse is vice president at Basware UK