“Just the tip of the iceberg” – it’s a common phrase used when there’s a lot more to something than first meets the eye. This is certainly the case when it comes to procurement. Procurement, while often reduced to the actions of buying and selling, awarding contracts, and sourcing goods or services for a company is actually much more involved and comprehensive than that. For example, the invoice payment process is a vital aspect of the procurement process that needs to be regulated, managed, and strictly overseen.
Invoicing process and payment approval may not seem like procurement-related activities, as they’re traditionally assigned to the finance and accounting department. However, this is where we start to see more of that iceberg mentioned above. It’s surprising to some, but the procurement process extends far beyond the initial stages of vetting and sourcing potential vendors for goods and services. It reaches all the way into accounting and finance, inventory management, and touches, to some capacity, every department within an organization.
Looking at the Full Procurement Cycle
When considering procurement activities, the comprehensive portrait really begins to take shape when considering that procurement activities really act as the oil that keeps your business running smoothly. There are, of course, the traditional procurement activities which include vetting and short-listing potential vendors and suppliers, conducting reverse auctions, and finally awarding and managing the won contracts.
However, the other major aspect of procurement, that sometimes goes overlooked, is the internal aspect. Procurement professionals are also charged with fulfilling purchase orders. The difference between a purchase requisition vs purchase order is that the latter is a preliminary step to the former. In other words, a purchase requisition is then followed by a purchase order.
This is an important detail to consider as procurement professionals, then, are also charged with acquiring the materials, goods, and services not only needed for the products and services that the organization offers but also all of the day-to-day materials needed for the organization to continue operating smoothly.
Handling and Managing Returns
Considering how involved the procurement process is in keeping an organization running smoothly, supplier-side errors can throw a major wrench in day-to-day operations. Supplier side errors can come in a wide variety of forms. Whether a procured product fails to meet a certain specification, discounts are misapplied, or orders simply go unfulfilled, your organization needs to be prepared for how to handle this in the context of the invoice payment process.
Having a clearly defined invoice payment process won’t only help your organization in streamlining the procurement process; it will also provide your team with direct actions to take when mistakes inevitably happen. And they will. Being prepared, however, will save your team time, effort, and frustration while allowing your organization to continue operating while the issue is addressed.
Cost-reduction and time-management are two of the core principles of procurement. By implementing a clear and well-defined invoice payment process, your team will also be able to more quickly and efficiently deliver payments upon receipt of goods or services. This is an extra benefit and contributes to cost-savings by qualifying your organization for discounts based on quick turnarounds on submitted invoices.
Suppliers You Can Trust
Procurement professionals understand that the vendor supplier relationship is vital to a successful procurement department. That’s why building a short-list of reputable and trusted suppliers that your organization can rely on overtime is considered a best practice when it comes to procurement.
This saves time on the back-end, as working with suppliers with which your organization has an established relationship gives your team the confidence of knowing what to expect. From language and organization-specific terminology to expected rates and terms, delivery times, and quality; there is a whole world of knowledge and comfortability that comes with a group of regular suppliers.
Wrapping It All Up: The Invoice Payment Process in Procurement
Invoicing, payment for goods and services, accounting, and inventory management are all aspects of procurement that sometimes get swept under the rug or identified as administrative work. However, the procurement cycle is truly a comprehensive one and includes the invoice payment process. Clearly defining the invoice payment process leads to a myriad of benefits both short, and long-term.
For more information on the full breadth of the procurement lifecycle, continue browsing ProcurePort. ProcurePort is the internet’s premier place for everything procurement, from best practices to software and technology to information and knowledge, and everything in between.