Procurement teams need to make sure they are aligned with the priorities and metrics used in Finance. After all, Finance departments are responsible for providing information to the C-Suite and board of directors when painting a picture of the overall performance of an organization.
It’s easy to understand why Marketing and Procurement struggle to work together. Marketing is concerned with the future, the brand, and interaction with prospects which isn't relevant to income statements nor balance sheets. Procurement is often focused on today (and yesterday), operations, and activities that can be traced to hard numbers.
You would think that Procurement and Finance would be well suited for collaboration since they are both focused on savings, managing risk and compliance improvement. However, this is seldom the case. Procurement is often viewed by Finance as a hindrance to company performance, and Finance is likely constructing the story of your team’s performance for the CEO and board. So it’s imperative that Finance sees your performance, and help them tell your story from your point of view.
Top 5 Ways to Align With Finance:
Make Finance's priorities your priorities.
Procurement and Finance share many goals such as savings, risk management, compliance, etc. But priorities change from year to year, so listen to the CFO. If you work for a publicly traded company, make sure you understand the earnings calls, and read the CFO’s comments to the press and analyst community before you write your plan. If risk management is a key issue for the CFO, make sure it’s a key issue for you. Additionally, you are in a position to help Finance with something that matters to them - cash flow. You can make a positive impact on something that really matters to Finance by taking advantage of new technology enable approaches such as dynamic discounting,
Speak the same language.
The most important piece here is savings. Procurement and Finance use different ways to calculate and record savings which leads to endless debates about the correct figures rather than discussions about how to improve results. If there is a difference between the definition of savings between Procurement and Finance, it’s not hard to figure out which one is going to win. Integrate your systems wherever possible so that you and Finance are dealing with the same data sets, and make sure both parties define how savings are measured in the same way.
Ask for help
Don't view Finance as a gatekeeper or judge. Take advantage of their specialized capabilities that can help you. For example, when building your savings targets, ask Finance for assistance in developing category specific approaches that factor in market and supply volatility. Chances are Finance can provide valuable input in modeling and projections. Finance can be your ally when building business cases for investments in technology such as a new eSourcing platform.
Tell your story
Despite having similar goals with Finance, keep in mind that Finance has their attention spread across the whole organization. They deal with Marketing, Sales, IT and all the other functions, so you need to put your story in front of them. On top of the reporting that Finance requires from you, provide them with your version of the story. You can do this with custom reports, newsletters, or case studies that showcase how Procurement is delivering real value to the broader organization.
Build and share a plan
Your annual plan and its associated quarterly updates is not just a series of targets and metrics. It’s your chance to frame the story for the year. Include your initiatives, and outline how Procurement plans to help the overall organization. Demonstrate how your efforts will align with the priorities of the CFO. Also, keep in mind that Finance is receiving annual plans from every department , so KEEP IT SIMPLE. You want the Finance department to walk away from your plan remembering no more than three things. Set up regular meetings where you can share updates as this will help ensure that you work towards the same clearly defined goals. It will also ensure that all expectations are met, and it might also strengthen your relationship.
If you follow five these simple steps, you’ll make sure that Finance is your ally when telling your story to the rest of the organization.