I hope that you have enjoyed the article “How Procurement Can Be Sabotaged By A/P.”
One of the circumstances that contribute to the problems described in the article is that the procurement and accounts payable departments are separate departments with their own managers and independent goals. The departments are intentionally kept separate for fraud prevention: companies don’t want the same people authorizing orders and authorizing payments. Keeping them separate provides checks and balances.
But how separate should they be?
I’ve observed the best collaboration between purchasing and A/P when they are both within a company’s finance organization and the heads of both purchasing and A/P report to the same boss. However, for various reasons, purchasing may be a part of organizations other than finance.
There is no one-size-fits-all answer as to how separate they should be, although I am uncomfortable when I do run into the occasional organization that has the same manager for both purchasing and A/P. However, regardless of reporting structure, purchasing and A/P should make it a point to collaborate often. To make sure their goals aren’t conflicting. And to better understand how each other’s operations contribute strategically.
When you have a good relationship between purchasing and A/P, it really doesn’t matter how separate the departments are. It just matters that they work synergistically.
Recommended Reading
- Improve Procurement Department Results through Process-Oriented Design
- Procurement Strategy Development
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