Today in the waning days of 2013, we being a new series that will highlight procurement’s (and the chief procurement officer’s) evolving influence within the greater enterprise. Each of these articles will tackle a business function or enterprise category that is actively progressing their strategies and general corporate outlook as a direct result of the procurement unit’s influence, processes and recommendations. Today’s article will discuss procurement’s evolving influence on financial management.
There are many business attributes that are considered the “lifeblood” of any given enterprise, such as contracts or talent. In most situations, however, the true lifeblood of a successful company is its handle on liquidity, cash management prowess and overall ability to forecast for the future. Modern financial management entails a sharp level of rigor on controlling cash and understanding blips in the future of the company’s financial health.
While the Chief Financial Officer (CFO) has long been heralded as one of few executives that could stand in any situation due to his or her longstanding reputation as a key business leader, contemporary economic times have dictated that this role “borrow” strategies from its “neighbor” unit in procurement. In fact, procurement’s influence can now be felt across a wide range of financial management approaches, including:
- The evolution of the financial ecosystem / financial supply chain. Top-tier procurement organizations are known for their ability to execute upon any process under the greater supply management umbrella in an agile manner and with ease, i.e. utilize spend analytics to identify savings opportunities and build that information into ongoing supplier negotiations. This holistic series of processes has traversed into the financial stratosphere, with financial management execs able to move between A/R, A/P and payment management in an agile manner to more effectively manage cash and drive visibility into corporate finances.
- “Futurecasting” the financial health of the greater organization. One significant byproduct of the above bullet is the ability to forecast the financial future of the organization at any given point in real-time. This avenue, an ideal mix of spend intelligence and financial planning, budgeting and forecasting, can present any execute (finance or other) with a vivid picture into the financial health of the greater organization.
- Collaborative development and linkage between key financial management processes and systems. The procurement group easily links their key systems together for maximum effectiveness and ease-of-execution (i.e. spend analytics linked to e-sourcing, etc.). For the finance crowd, linking accounts payable / ePayables to cash management or payment factories can provide real-time visibility into cash. While procurement links their systems with agility in mind, it also assists the CPO when needed to provide real-time intelligence to other key executives. This path can be heavily-leveraged by the CFO and his / her team when planning for the future.
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