Optimising financial processes

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The “4 Perils” of Purchase to Pay (P2P) and 13 Best Practices . .

“What, in your experience, is the most significant “root cause” of Purchase to Pay (P2P) process failure, other than human behavior?”

The “Spend Cycle” or Purchase to Pay, is regarded as the business process most susceptible to systemic process breakdown.

Maybe because it touches so many people within and beyond the organization.

Maybe because it so broadly exposes the human behaviors that can increase or decrease friction in the process, and thus the related cost and cash impact.

We posed the question above in a poll over the past 2 weeks.

It generated a lot of discussion, online and offline.

It was a simple multiple-choice poll with just 4 options (the 4 “perils”), but in many ways that simplification proved helpful.

Discussions developed into which are the most painful symptoms of P2P process failure and which are the most pernicious root causes.

The poll options offered were;

  1. Supplier Invoice Capture/Timeliness
  2. Goods Receipt Capture/Timeliness
  3. PO Existence, Quality & Timeliness
  4. Vendor Master Data Completeness, Accuracy & Integrity

The source of the question relates a little to last week’s discussion of the “Solow Paradox” whereby broad economic output trends do not align with increasing technology investment, even as a trailing indicator.

We are starting to realise the trifecta of process (simplicity), (human) behaviour and data (integrity) have an asymmetric impact on performance in many areas of business.

To the extent that, the growing evidence indicates, we may be better served by understanding, considering and focussing on these 3 topics BEFORE we consider digitization or the application of technology, however appealing the alternative sequence may appear.

So, to return to the topic of Purchase to Pay, and its broader end-to-end cousin, Source to Pay, I consulted two experts in the field.

Steve Fox, former VP Global Business Services at Thermo Fisher Scientific and Jamie Radford, Founder of the Accounts Payable Association and former Head Of Procurement at Finning, will join us in discussion on 26th September.

We will explore the global challenges facing “Buying” and “Paying”, discuss the “4 perils” and share the 13 P2P Best Practices of high performing organizations.

You can get details on their session here . . . 

You can see the detailed results of the “4 Perils” poll results here . . . 

Thanks for reading . . .