Friday Rant: Should Finance Own P2P?

In this rant, I’ll purposely be contrarian. In 99% of organizations today, procurement owns the P2P technology platform, perhaps in collaboration with IT (or at least the first “P” in it). The second “P,” if it exists in a technology-automated manner, usually reports directly into finance with a dotted line to procurement — or, in the minority of cases, AP sits within procurement, but has a dotted line into finance (and in the true minority of cases, P2P platforms reside entirely within IT, but with procurement and finance as stakeholders). To date, few organizations have questioned the more popular structures that I suggest. But I think there might be a case to make for P2P to rest within finance with procurement influence even though it’s clearly not happening yet. Before you flame me in a comment, hear me out — this is, after all, a Friday Rant! Consider the following reasons why finance should consider taking ownership of P2P:

• At the moment, working capital is a giant concern for companies and their suppliers. Procurement organizations sit entirely in the wrong seat when it comes to understanding internal working capital strategies and requirements (but procurement can serve as a useful intermediary with finance when it comes to articulating the working capital needs of the suppliers they manage)
• Finance and internal audit groups are taking on an increased role in two distinct areas: supply risk and procurement fraud. By owning the P2P environment instead of just serving as a customer or user, finance can help design the right systems, controls and processes around specific needs in these areas
• P2P is not procurement (or sourcing or supply management). Rather, it represents an extension of transactional systems designed to enforce policy, improve audit trails and provide greater visibility and transparency into indirect spending (and the invoice automation and payment processes of all types of spend)
• Procurement does not focus on payment or contract management. The function focuses on sourcing, buying and supplier management. There is a subtle but important distinction here. Under the current procurement-led setup, organizations seem to be following the PO and invoice versus following the money or cash, if you read between the lines of what most are trying to do with P2P. Moreover, given that legal reports into finance and legal groups quite often own more advanced contract management selection processes — or are at least one of the primary stakeholders — it is not unprecedented for finance to extend influence into another technology buying area…