The decade ahead: finance and procurement departments to take the lead in addressing business imperatives
Basware predicts that over the next 12 months the ‘buying and paying’ departments will become seen as more than an internal service team
Basware, the global leader in purchase-to-pay solutions, has today revealed its predictions of the issues that will keep finance and procurement departments busy in 2010. Spanning high level business themes including integration, buyer / supplier relationships, sustainability and risk, ‘buying and paying’ departments will lead organisational efforts to address business imperatives with immediately addressable and enormously impactful changes.
Integration and fragmentation
Tightened economic conditions and a constant drive for efficiencies over the last few years have produced leaner, flatter organisations which have, in turn, led to increased collaboration and functional alignment within businesses. However at the same time, business ‘service centres’ including finance and procurement have devolved responsibilities within the organisation. While finance teams control policy and governance more tightly than ever before, the responsibility for some areas of cost management has disseminated to individual lines of business.
This simultaneous integration and fragmentation of processes spans all company operations and will be a major business challenge over the next decade. Finance and procurement departments will be in the front line, taking a lead in identifying and enabling business strategies.
The requirement for organisational alignment within increasingly devolved processes goes right up to board level. Basware CFO and CPO research in June and November 2009 found that businesses with high levels of both automation and integration within finance and procurement functions saw decision-makers’ satisfaction that the procurement function achieves strategic goals increase by 15.2% .
Buyer / Supplier Relationships
The market downturn is fuelling a deep drive for integration and interaction. All companies will work harder to connect with others in their supply chain on a much more fundamental level. Consolidation across all of the major global industries has demonstrated a desire for closer interoperation between suppliers and buyers, and finance and procurement departments will find themselves at the forefront of this drive for integration. We are already seeing the rise of scalable and open supply and payment networks and their ability to speed up the movement of documents in the form of invoices and POs between organisations will remain compelling. These networks will grow in dominance over the next few years to enable supplier discovery, the negotiation of favourable terms and faster payment – helping companies expand their global reach.
The last few years have reminded many that growth in business comes as a result of carefully balanced risk, and the finance and procurement departments will be viewed in the coming years as a key function in mitigating unnecessary risks. Delivering to this expectation will require greater visibility of the entire purchase-to-pay function and supply chains as well as increasingly connected purchase-to-pay processes. Identifying early warning signs of weakness in the supply chain will help businesses mitigate risk while having better visibility to spend allows them to improve cash management and take advantage of flexible payment terms such as dynamic discounting.
If it wasn’t already, the Conference of Parties summit in Copenhagen (COP15) will ensure that sustainability is put firmly on the agenda for every department of every business. Sustainability for the procurement department will include a requirement for service and product providers to ensure sustainability in the supply chain, and for the finance teams, ‘global impact’ will begin to feature prominently in tenders. On a practical level, the environmental spotlight will fall upon individual processes within the finance department, increasing the appeal of more sustainable practices such as e-invoicing to replace traditional paper-based workflows. Moving 200,000 invoices per year from a paper process to e-invoicing saves enough energy in the paper manufacturing process alone to power 105 40w light bulbs 24/7 for a whole year.
Basware’s Steve Muddiman said: “The last couple of years brought a game change for business, but we enter the new decade with a clear view of the work needed to ensure organisations can thrive within evolving market conditions. Business critical finance and procurement departments are finding themselves thrust to the fore, leading the way in devising and implementing new processes, technologies and workflows. In stepping up to the challenges the new decade brings, these ‘buying and paying’ departments will find that they achieve a much more strategic role in the success of their organisation, breaking away from their old perception of an internal service team.”
Basware is the global leader in purchase-to-pay solutions with more than 1,500 customers and 850,000 users in over 50 countries around the world. With Basware, organizations can reduce the cost of buying and paying for goods and services and gain visibility and control of their entire spending process by automating manual processes, from sourcing, contract management, purchasing and supplier collaboration to invoice automation. Basware solutions and services enable substantial cost reductions across businesses and deliver value by providing compliance and control, as well as fast return on investment. The solutions are distributed and implemented, either on site or as a service, in Europe, the US, and Asia-Pacific through an extensive network of Basware offices and business partners. www.basware.com
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