Optimising financial processes

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Procure to Pay (P2P) – Have the Wheels Fallen Off?

I had a great conversation with a GBS leader on this topic. I share the recording of this below.

“Colleagues in P2P, Procurement Operations and Accounts Payable are working their Christmas baubles off to respond to the demands of management, colleagues and suppliers whilst trying to navigate processes and technologies that were designed to help, but which are actually making things worse . . . “

We all know that for any end-to-end process, 95% of the issues in the “right hand side” find their root cause to the “left hand side”.  Hence, our use of the term “shift left thinking” in process improvement. 

In P2P, this means that issues in invoice-to-pay and accounts payable are caused by poor vendor master data, obscure contract terms, poor PO exploitation, delays to goods and service receipting and, eventually, the challenges of getting an accurate invoice into the ERP system for a 2 or 3 way match.

In the drive for digitization, many organizations have assumed that a single P2P “journey” with a smart technology will “transform” the process. I hear repeated stories of single digit adoption by suppliers, challenges with enablement, 3 way matches in places that don’t make sense, tail spend misery and more.

As a result, late payment, increasing suppier queries, disarray in payment terms and vendor credit holds are all on the increase!

There is NO SINGLE P2P journey that fits all your buying/spend requirements and experiences.

A focus on “what good looks like” (for the end-to-end process, not just the silos) and priority attention to process defects more than outcome measures/KPIs are critical to drive better outcomes.

Sounds counter-intuitive? Consider this; to improve an athletes results, just saying “run faster” and providing the latest times achieved does not cut it . . .

Be in no doubt that this is a process issue more than a technology issue.

To paraphrase some very smart guru “automation applied to an efficient operation will magnify the efficiency but automation applied to an inefficient operation will magnify the inefficiency”.

You can read a brief summary of my conversation here . . .  or watch/listen to it here . . .  

Thanks for reading . . .