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Ten tips for optimizing your P2P function
But well developed (or not!) P2P could be its role, there will always be at least some forms it can be improved.
The purchase to pay function tends to be one of the arms lower profile of any organization, but that is probably one of the most important – especially in these times where cost reductions and renegotiation of payment terms has become a key for companies increasingly need funds in the world.
In this spirit, the latest in a series of tips sson becomes top P2P network with members to help ensure that measures can be taken to manage their role via P2P for operational excellence and beyond.
1. leverage technology
It is difficult to imagine a business district can not improve judicious application of chip technology – the purchase and payment of the role is certainly not one of them. Even in times of spending constraints, the benefits that technology can invest in one or all stages of P2P (especially if the investment has been deferred for a significant period) may be too attractive to ignore, even for those most miserable table: not just to have a countdown – although this is certainly a factor important – but to reduce the risk of error and more generally of clamps bit of softness that everyone can join a lot of excess expensive luggage.
"Investing in automation and technology – which sets standards of excellence," said Tim Schmandt of Datrose. " Through automation is: quality improvement, improved controls, improved cycle time, the possibility assist in the initiatives of corporate social responsibility to reduce costs. The automation of the best purchases far exceeds any attempt Part of the AP software to manage markets. Despite the din, That is the case today. In the short term, it is easy to foresee that many products do two things very well. "
2. This purchase orders (even if not available)
Those see the acquisition as a mysterious arcane discipline (and that any procurement specialist can testify, which is an important part Company) are often unaware of the value of purchase orders – but for those who work in the public there is no excuse. Purchase orders must be used as widely as possible right through the company mandate from above, but are simply too important and widely impact tool for individual users to be allowed to avoid them. Where, because it is a PO can not or should not be used as little as possible should be removed from the settlement system – try as much as possible to normalize non-standard and the standard itself can be hosted by a well-ordered PO complete.
"Two essential conditions for effective P2P cycle 100% (or as close as possible) commands advance supply issue and a simple, easy to use workflow system or process any remaining condition for approving invoices and resolve complaints, "said Jim Whitworth independent shared services specialist." more intensive activities P2P hand are generally made to buyers and management consulting bills that do not correspond to the order. Having a large number of bills without counterparty OP or appropriate follow through workflow presents a risk control and budget management issues, in addition to the unnecessary workload. "
3. Put the resources necessary for reconciliation
It's funny – or it would if it were not so expensive – how often serious P2P kick in the scene of reconciliation. It seems like common sense to put the necessary resources – human and technological – to achieve reconciliation optimal but judging by some of the issues raised in the recent events sson it remains a relatively neglected area in many organizations. OK it is not as simple as ticking the boxes, but make sure that match what you spend on what has actually asked not to be the task the most difficult – and if so, must rethink the process of reconciliation and its assessment of where the emerging issues and take steps to obtain NPS be solved in the future.
Avinash Iyer, Director, Business Solutions Operations Xtenza, suggests taking care of the essentials: "After receiving the goods, the bill must be reconciled with the purchase order and receipt of goods prior to payment. Prices of goods and adequate service? Are the amounts of the contracted amounts? If the amounts right? Are there other costs, including taxes, valid and correct? "
4. Rating Scale: the P2P services to share
The shared services model may not be appropriate for small businesses – but if it works within a large and complex organization (perhaps with an international scope), which is almost certain she will be able to find gold in Thar Hills P2P sharing services. The case for shared services in terms of cost-effectiveness and are more or less obvious – but P2P in particular can also see the benefits of shared services in areas such as controls and the pursuit of excellence in employee development.
"This is an area really needs to be managed effectively through a Migration to shared services, "said Jim Whitworth. When an ad hoc instead of the order approving the payment process and can survive under one roof, is almost doomed to failure when the division among the places which are countries, perhaps on different continents. With the accession a global process management, streamlining systems and user training and proof of acceptance, PTP may be an effective and low, the weak process intervention. "
5. Bridging the gap with the acquisitions of Finance
For some (particularly those who have an interest in keeping them separate) procurement and finance could be considered as distinct, if closely related, arguments – But many respected figures on the right through the space to consider them together, if they do not merge completely, offers advantages significant in the organization.
Schmandt Tim said: "It should always gray areas that overlap between the functions of purchasing and finance. Instead of trying to separate these limitations, I think it's healthy for companies to drive more and more blurred these lines and the fusion two arenas. There will always need to have separate functions, but with technology, automation and the exchange rate, the game changes. For example: With all the workflow technology in AP courses, AP departments can play a vital role in helping to streamline recruitment suppliers, discounts for early payment, expenditure analysis and provider satisfaction. Best Companies in their class, have recognized and taken advantage of the value of the exchange of data between functional units. We also recognize the need to develop the knowledge and experience of outsourcing management contracts. Again, these roles have been contracting because of the similarities, but the management of outsourcing has some differences subtle. Companies that allows users to create and reinforce the strengths of Finance and Procurement Group will be the winners. Instead of two separate circles today, we can predict the migration to a decrease in search of mice relief structures of the ME '=. "
6. Communicate regularly and correctly
As everywhere in P2P is crucial to maintain open lines of communication between all segments of the workforce and each element of the process. In fact, taking into account the complexity of the workflow, making good communication is even more important than in many P2P other functions: not only all the different parts of the process must be aware of changes or developments in the environment operating, but it is essential that the right parts of the function give the right messages at the right time. Communication with suppliers, for example (especially if payment problems) must come from a precise location, a well thought out and a strict disclosure policy.
"Organize meetings regular team with representatives from all parts of the process (the ministries of order creation, procurement, accounts payable, cash, a person to make the system work), "urges Michael Evans, Kansas City Southern Railroad." Communicate, especially if problems Cash … You do not have people in the field to make promises for when payments are made.
7. Ordering the first procedure …
If you are preparing for a major application system or any other activity automation that will transform or have a significant impact on their purchase to pay process, you must ensure that the process is so clean and optimized as possible before starting to automate. "Do not automate a mess "is sometimes many tips in this area – and for good reason. We could live in a technological world very remarkable, but there are always limits to what can be achieved by it: the food, even the most advanced system for a load of contradictions, inaccurate or incomprehensible information, or applied to a field of obstacles, the process bottleneck and tends to cast pearls before swine.
"It are several ways that technology can help simplify the process of P2P, but technology is only one variable in the equation, "says Juliana Sugarek CentrePoint energy. "Note If you automate a bad process, you will lose some effectiveness in the short term they need configuration and extensive customization. In the long term, you will experience the erosion of efficiency due to increased costs updating and maintaining their systems. The variable can be defined that offer the greatest gains is the process. Make sure your process is efficient and well controlled first. By the first process, exponential gains can be achieved through the automation process. "
8. … And methodological point of view
Following this last point when you look at the cleaning process prior to the application that is worth considering to go over it in a systematic manner through the implementation of process improvement methodologies such as Six Sigma. Well that could mean more investment and more complex at the front (as many organizations do not have the internal expertise to hand) benefits can not be guaranteed for those who lived through the pain: the application of Six Sigma can not only improve efficiency within the function appropriate, but may also take advantage of parts of companies that interact with the new streamlined process (and in the case of P2P, which is the most …).
"There are several advantages the application of Six Sigma or process improvement to other P2P, Amgen says Ramesh Krish sson (listen to the podcast Ramesh on "Implementation Methodologies Six Sigma for the purchase to pay process" here) " You get the efficiency of processes, you can get the transactional efficiency, and cost effectiveness. Many companies tried to implement Six Sigma or other methodologies and the success rate has been uneven, mostly. The reasons are multiple. First reason is that many companies are looking to adopt a Big Bang … They do not have the skill set and internal quantitative analysis of hand work to complete what is required of a rigorous and disciplined Six Sigma. The second reason is that many investments tend to be very important while taking to provide consultants and experts in the field to replace a large number of processes. The third reason is, P2P is a function not really much simpler than now, but that tends to exist in silos. "
9. The future is green – to prepare for the future
As sustainability is pushed up the agenda by the government and consumer pressure, P2P has taken its share of tension – And the part that could Thanks very important before too long for greater attention to the origin and the environmental impact of products and services. Functions purchase and may soon begin to collect and analyze a large amount of data on the carbon footprint of what was purchased with large organizations, in particular, should take steps now to prepare for what is required of them in the arena purchase instead of waiting, or even be surprised by the requirements set by the government or consumers pressure.
"Managing the supply chain becomes more important to sustainability, "said Warren Wilson, Ovum," because, one, organizations are facing increasing pressure (from consumers, regulators, even investors) to environmental responsibility, and two, accountability requires collection and aggregation, consistent and reliable in all stages of product life cycle, from cradle to grave – that is, the supply chain (and distribution). Software automates the process and make it practical … The regulatory pressure is very important, but it will be consumer demand. Already, consumers show a preference for green products and, in some cases, are willing to pay a little more for them. At some point the question changes from "Is it a green product? "How I can trust that is green? To answer this question lead to the creation of markets or the adoption of standards and audit process. Investors also have an interest – for example, that consumers are beginning to favor companies with better environmental records, that carbon and becomes a commodity. "
10. Getting the right support – from the top
It is fair to say that P2P is relatively rare regarded as one of the most attractive parts of society – but that makes it even more important that you should be guaranteed clear support from the top before starting any program of transformation. To override the objections of those outside the role they could comfortable with (or just downright nasty) something that will jeopardize the status quo is closer to a mandate from the top as possible and has not afraid to push the point if you start hitting the head. Any serious disruption to a major function that P2P has its detractors: there will be much easier critics push back online with the help of a friend of the committee.
"Sponsoring the top is absolutely crucial," said M & A specialist independent Graeme Ludlow. "Getting a clear endorsement of an important person in the organization sends a stronger than the personal opinions of individuals, society has decided that is how it will be. You can feel very lonely sometimes unloved pushing through improvements and potential problems is to find the discharge of several different parts of society. This is funny how much less lonely way – and how much less push-back you have to deal with it – if the project was the guiding hand of director financial results. "
The Procure-to-pay tends to be a function of the profile of the lower arms of any organization, but there is no doubt that one of the most important – especially in these times when cutting on costs and renegotiating the terms of payment have become increasingly important for companies, short of money, all the world.
In this spirit, the last of the series becomes Top Tips sson P2P Members network to give their opinion on what measures can be taken to manage P2P function through operational excellence and beyond.
1. Take advantage of technology
It is difficult to imagine a business district that can not be improved by applying judicious chip technology – and the payoff function acquisition is certainly not one of them. Even spending time constraints, benefits that investing in technology in one or all stages of P2P (especially if the investment has been postponed for a significant period) may be too attractive to ignore, even for the table the most miserable: not only is the model below – although this certainly an important factor – but by reducing the scope of the error and, in the general hardening of the soft little that anyone can reach many Excess baggage expensive.
"Investing in automation and technology – that will define the standard of excellence" Declares Tim Schmandt Datrose. "With automation comes: improved quality, improved controls, improved cycle time, the opportunity to help the corporate social responsibility initiatives, cost reduction. The automation of best buys far exceeds any attempt by the software to manage AP acquisitions. Despite the din, That is the case today. In the short term, it is easy predict that many products do both very well. "
2. This purchase orders (Even if not available)
Those who see the acquisition as a mysterious arcane discipline (and as any Procurement Specialist I can answer is quite a significant part of the business) are often unaware of the value of the order – but for those who work in function there is no excuse. Purchase orders should be used as widely as possible right through the company's mandate in above, but are simply too important and largely impact a tool for individual users who may be bypassed. If for some reason one can not, or OP should not be used as little as possible should be removed from the settlement system – try as much as possible to normalize non-standard and the standard itself can be embraced by a well-ordered PO complete.
"Two essential conditions for effective P2P cycle 100% (or as close as possible) issue purchase orders in advance of supply and a simple, easy to use workflow system or process of any remaining condition for approval of the bill and resolution consultation, "says an independent expert Jim Whitworth shared services." The activities of labor more likely to refer buyers P2P and management consulting bills that do not correspond to the order. Having a large part of the OP without matching invoices or adequate monitoring flows through a risk control and budget management issues, in addition to the unnecessary workload. "
3. Provide resources necessary for reconciliation
It's funny – or would if it were not so expensive – The frequency of P2P serious blow to the stage of reconciliation. It seems that the good sense to put the necessary resources – human and technological – to achieve optimal reconciliation, but judging by some of the issues sson in recent events it is still a rather neglected area in many organizations. OK, so it's not as simple as ticking the boxes, but make sure that match what you are spending what has actually been asked not to be the most difficult – and if so, to rethink the process of reconciliation and its assessment of where problems occur, and action to obtain PDQ resolved in the future.
Avinash Iyer, director of operations Xtenza Business Solutions, suggests taking care of the essentials: "After receiving the goods, the bill must be reconciled with the purchase order and incoming goods before payment. Prices of goods and services adequate? Are the sums of the amounts contracted? It was the right amount? Are there any other charges, including taxes, valid and correct? "
4. Rating Scale: the P2P services to share
The shared services model can not be suitable for small businesses – but if you're in a large complex organization (perhaps within reach international) that is almost certainly will be able to find gold in these hills P2P services. The case for shared services point of view of cost effectiveness and are more or less obvious – but P2P in particular can also see the benefits of shared services in areas such as controls and research for excellence in employee development.
"This is an area that really needs to be managed effectively through a migration to shared services "Said Jim Whitworth. When an ad hoc instead of the order, the approval process and payment can survive under one roof, is almost doomed to failure when the division among the places which are countries, perhaps on different continents. Join overall management, streamlining systems and training users and proof of acceptance, PTP may be an effective and low, the process low response. "
5. Bridging the gap with acquisitions Finance
For some (particularly those with an interest keep them separate) Procurement and Finance could be considered different if closely related, arguments – but many personalities observed in space through them together to consider whether they do not merge completely, offers significant advantages in the organization.
Schmandt Tim said: "There was always some gray areas that overlap between the purchasing function and finance. Instead of trying to separate these limits, I think it's healthy for companies to grow more and more blurred these lines and merging the two arenas. There will always be the need have distinct functions, but with technology, automation and speed changes, the game changes. For example, with all the workflow technology in AP courses, AP departments can play a vital role in helping to streamline the recruitment of providers, payment discounts principles, analysis of expenditure and provider satisfaction. best in class "companies have recognized and taken advantage of the value of the exchange of data between functional units. We also recognize the need to develop the knowledge and experience of managing outsourcing contracts. Again, these roles were released for recruitment because of the similarities, but the management of outsourcing has some subtle differences. Companies that allows users create and consolidate the strengths of both Finance and Procurement Group will be the winners. Instead of two separate circles today, we can predict migration to a minor, the structure lean "mouse-ear '= search. "
6. Communicate regularly and correctly
Like everywhere P2P is crucial in maintaining lines of communication open among all segments of the population and each element of the process. In fact, taking account the complexity of workflow, making good communication is even more important in P2P in many other functions: not only the different different parts of the process must be aware of changes or developments in the operating environment, but it is essential that the right parts of the function are given the right messages in the right time. Communication with suppliers, for example (especially if the problems in payment) must come to the right place according to a well thought out and strict disclosure policy.
"Hold regular team meetings with representatives all parts of the process (creating departments orders, purchases, accounts payable, cash, a person to make the system work), "urges Michael Evans, of Kansas City Southern Railroad. Communicate especially if cash flow problems … Do not have people in the area to make promises for when payments are made. "
7. First Order Process …
If you are preparing for an application system majeure or any other activity of automation that will transform or have a significant impact on your purchase to pay process, you must ensure that the process is so clean and optimized as possible before starting to automate. "Do not automate a mess" is advice many times in this area – and for good reason. We could live in a world technologically significant, but there are limits to what can be achieved by it: the food, even the most advanced system for a load of contradictions, inaccurate or incomprehensible information, or applied to a field of obstacles, the process tends to bottle neck and throw pearls before swine.
"There are many ways that technology can help simplify the process of P2P, but technology is only variable in the equation, "says Juliana Sugarek CentrePoint energy." Note that if you automate a bad process, you lose some short-term efficacy require extensive configuration and customization. In the long term, you will experience a further erosion of the effectiveness because of rising costs to update and maintain their systems. The variable can be defined that offer the greatest gains is the process. Make sure your process is effective and well-controlled first. By the first process, exponential gains can be achieved by automating the process. "
8. … Y and methodological
Following this last point when you look at the process of cleaning before application useful to consider it being systematically by the application of process improvement methodologies such as Six Sigma. Although this may mean investing more and more complex in advance (like many organizations lack the expertise internal to the hand) the benefits may be supported by those who lived through the pain: the application of Six Sigma, not only can improve efficiency within the appropriate function, but may also have knock-on effect for parts of companies that interact with the new streamlined process (And in the case of P2P is most of them …).
"There are several advantages to the implementation of Six Sigma or process improvement other P2P "Amgen says Ramesh Krish sson (listen to the podcast Ramesh" The application of Six Sigma methodologies to pay for the purchase process "here)" Got the effectiveness of processes, you can get efficient trading and profitability. Many companies have tried to implement Six Sigma or other methods and the success rate has been uneven, mostly. The reasons are multiple. First reason is that many companies are looking to adopt a Big Bang … They have no interior set of skills or analytical skills Quantitative and manpower to complete what is required of a rigorous and disciplined Six Sigma. The second reason is that many investments tend to be very important in taking while providing consultants and experts in the field to replace a large number of processes. The third reason is, P2P as a simplified function is not exactly a large number of companies, but that tends to exist in silos. "
9. Future green – Prepare for the future
Sustainability is pushed up the agenda by the government and pressure consumers, P2P must take their share of stress – and sharing with others who may be very important, because before too long for greater attention the origin and impact environmental products and services. The procurement functions may soon begin to collect and analyze a large amount Data on the carbon footprint of that acquired with large organizations, in particular, must take steps now to prepare for what will be required of them in the arena of purchase instead of waiting, or even be surprised by the requirements set by the government or the pressure consumers.
"Managing the supply chain becomes more important to sustainability," said Warren Wilson, Ovum, "because, one, facing increasing pressure from organizations (consumers, regulators, even investors) environmental responsibility, and two, responsibility requires the collection and aggregation, consistent and reliable in all stages of product life cycle, from cradle to grave – that is, the supply chain (and distribution). Software automates the process and make it practical … The regulatory pressure will be very important but this will be consumer demand. Already, consumers show a preference for green products and, in some cases, are willing to pay a little more for them. At some point the question changes from "Is this green product? "How can I trust that is green? To answer this question lead to the creation of markets or the adoption of standards and verification processes. Investors also have an interest – for example, as consumers begin to favor companies with better environmental records, such as carbon becomes a commodity. "
10. Getting the right support – from the top
It is fair to say that P2P is relatively rare regarded as one of the most attractive society – but that makes it even more important that you should be the guarantee of clear support from the top before starting any program transformation important. In order to replace the objections of those outside the function that can be comfortable with (or just downright nasty) something that will threaten the status quo is closer to a mandate from the top as possible and not be afraid to push the point if you start hitting the head. Any serious disruption a function ambitious and P2P will have its detractors: there will be much easier to push the critical back online with the help of a friend of the committee.
"Sponsoring the summit is absolutely crucial," said M & A specialist independent Graeme Ludlow. "Getting a clear support of important figure within the organization sends a powerful message that whatever the personal opinions of individuals, the company decided that it how it will be. You may feel very lonely or unloved at a time when you push through improvements and potentially disruptive discharge is to find several different parts of society. It's funny how you feel less lonely – and how much less push-back you have to deal with it – when the project is the hand guiding it through CFO fruit. "
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