In 2010 Finance and Procurement Departments Take the Lead

Jan. 6, 2010
'Buying and paying' departments will achieve a much more strategic role in 2010 -- breaking away from the perception of them as internal service teams.

Spanning themes including, buyer/supplier relationships, sustainability, risk and integration, 'buying and paying' departments will lead organizational efforts to address business imperatives, according to Basware, a provider of purchase-to-pay solutions.

Here are some predictions Basware makes for 2010:

Buyer / Supplier Relationships
The market downturn is fueling a deep drive for integration and interaction. All companies will work harder to connect with others in their supply chains 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.

Basware says it is 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 purchase orders (POs) between organizations will remain compelling. These networks will grow in dominance over the next few years to enable supplier discovery, the negotiation of favorable 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. The finance and procurement departments will be viewed in the coming years as a key function for mitigating unnecessary risks. Delivering on this expectation will require greater visibility of the entire purchase-to-pay function and supply chain, as well as increasingly connected purchase-to-pay processes. Identifying early warning signs of weakness in the supply chain will help businesses mitigate risk, and having better visibility to spend will allow them to improve cash management and take advantage of flexible payment terms, such as dynamic discounting.

The Conference of Parties summit in Copenhagen (COP15) will help ensure that sustainability is put firmly on the agenda for almost every department of most businesses. Sustainability in the procurement department will include a requirement for service and product providers to ensure sustainability in their supply chains. For the finance teams, 'global impact' will begin to feature prominently in payment processes.

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 40-watt light bulbs 24/7 for a whole year.

Integration and Fragmentation
Tightened economic conditions and a constant drive for improved efficiencies during the last few years have produced leaner, flatter organizations which have, in turn, led to increased collaboration and functional alignment within businesses. However, at the same time, business 'service centers,' including finance and procurement, are transferring responsibilities to other departments within the organization. While finance teams control policy and governance more tightly than ever before, the responsibility for some areas of cost management has transferred to individual lines of business.

This opposing integration and fragmentation of processes span all company operations and will be a major business challenge over the next decade.

The requirement for organizational alignment within increasingly devolved processes goes as far as the 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 saw an increase in decision-makers' satisfaction that the procurement function was achieving strategic goals increases by 15.2%.

"The last couple of years brought a game change for businesses, and we enter the new decade with a clear view of the work needed to ensure that organizations can thrive within evolving market conditions," said Ari Salonen, Basware's general manager for North America. Business-critical finance and procurement departments are finding themselves thrust to the forefront, 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 organizations, breaking away from the perception of them as internal service teams."

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