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Transaction blind spot between procurement and finance

A lack of visibility of transactions, such as orders, invoices and payments, is the biggest challenge between procurement and finance for sixty per cent of organisations, according to a survey by PayStream.

As part of its research on automation trends within procurement and accounting processes, PayStream Advisors surveyed more than 300 North American organisations about the major challenges between procurement and finance. It found that 56 per cent of procurement teams reported centralised purchasing processes throughout the company, while 63 per cent of AP teams also used centralised invoice management.

It also found that about a third of respondents reported that they do not experience many issues between their procurement, AP and finance teams. But others said there are communication deficiencies, such as a lack of visibility and poor exchange of information. The report stated: “Common instances may be when purchasers file purchase orders or invoices and finance does not have visibility into spend activity, or when procurement is waiting on the status of an invoice payment by AP.”

The report then goes on to list several ways to create synergy in the back office. Apart from the usual 'get executive buy-in' and 'improve communications and employee engagement', the PayStream Advisors report outlines some of the common mistakes that managers make when implementing a technology solution to manage transaction data workflows within a company. The mistakes often made by synergy change teams, as mentioned in the report, are as follow:

  • Defining synergy goals too narrowly or imprecisely, such as specifying singular communication channels or focusing on a particular invoice work flow.
  • Or defining end goals too broadly or vaguely. It is common to see transformation goals saturated with unclear phrases, such as “cross-fertilization of ideas” and “sharing best practices.”
  • Management may not acknowledge all cultural differences across departments. It is hard to gauge and evaluate all of the nuances of language, interaction, and systems within specific departments, especially within large organizations, but ignorance of cultural dynamics leads to miscommunication and possible friction.
  • Rollout plans may not involve all of the right parties. Although practitioners meet with all stakeholders and communication channels are established, implementation plans may accidentally exclude necessary teams or individuals.
  • Implementation timelines may not be realistic. It is common for companies to want to integrate their processes as quickly as possible, but rushed timelines put management at risk of making mistakes or missing opportunities for generating more value.

CTMfile take: Late payments are a major challenge for procurement and finance departments, according to 30 per cent of the survey's respondents, while a technology/systems mismatch also causes problems for 28 per cent. The full report can be downloaded here.

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