The Procurement-Finance Playbook: Streamlining Collaboration and Communication
The Procurement-Finance Playbook: Streamlining Collaboration and Communication
In many growing businesses, procurement and finance teams operate in different worlds. Procurement focuses on sourcing the best goods and services quickly to keep operations running smoothly. Finance, on the other hand, is tasked with controlling costs, managing cash flow, and ensuring every dollar is accounted for. This natural friction between speed and control often leads to miscommunication, process bottlenecks, and missed savings opportunities.
When procurement and finance teams are misaligned, the entire organization feels the impact. Delayed purchases frustrate operational teams, rogue spending creates budget uncertainty, and manual invoice reconciliation drains valuable time from the finance department. To transform these functions into strategic growth levers, you need a unified playbook—a clear set of strategies and tools designed to foster seamless collaboration and communication.
This article provides a comprehensive guide for aligning your procurement and finance departments. We will cover the common challenges that create friction, actionable strategies for improving communication, and how the right technology can create a single, unified workflow that benefits both teams.
Download the free ebook: The Procurement Strategy Playbook for Modern Businesses
Why is collaboration between procurement and finance so challenging?
Collaboration is challenging because procurement and finance teams often have conflicting priorities, operate with different data sets, and use siloed systems. This fundamental disconnect leads to poor communication, operational inefficiencies, and bottlenecks when it comes to making data-driven decisions about company spend.
Without a shared process or platform, these teams aren’t set up for success. Procurement is measured on vendor performance and speed, while finance is judged on budget adherence and accuracy. This creates a natural tension that manifests in several key areas.
Conflicting goals and KPIs
The most significant challenge is the misalignment of core objectives. Procurement is often incentivized to get the best products from reliable vendors as quickly as possible. Their key performance indicators (KPIs) might include supplier lead times, product quality, and user satisfaction.
Finance, however, is focused on financial control and efficiency. Their KPIs revolve around cost savings, budget variance, on-time payment performance, and days payable outstanding (DPO). This means while procurement is pushing for a quick purchase to avoid an operational delay, finance may be pushing back to ensure the purchase aligns with budget forecasts and preferred payment terms.
Disparate data and lack of visibility
Procurement and finance teams rarely work from the same set of data. Procurement manages vendor information, contracts, and product catalogs in one system (or, more commonly, across dozens of spreadsheets and email chains). Meanwhile, finance manages invoices, payments, and general ledger codes in an accounting system or ERP.
This separation creates a critical information gap. Finance has no real-time visibility into what is being purchased until an invoice arrives, by which time it's too late to control the spend. This lack of a single source of truth makes accurate forecasting impossible and forces the accounts payable team into a reactive role, chasing down details for every invoice.
Manual, disconnected workflows
Manual processes are the enemy of efficient collaboration. When purchase requests are made via email, approvals are tracked in spreadsheets, and paper invoices are physically routed for sign-off, the entire purchase-to-pay process becomes slow, opaque, and prone to error.
This manual chaos prevents either team from having a clear view of the procurement lifecycle. Procurement can't easily track the status of an invoice, and finance has no context for the purchases behind the payments they are making. The result is a time-consuming, frustrating process for everyone involved.
The Procurement Strategy Playbook for Modern Businesses
Learn the key pillars of a strong strategy, valuable procurement metrics to track, and initiatives you can start implementing today.
How to improve communication between procurement and finance teams
To improve communication, procurement and finance must establish shared goals, create unified processes, and leverage a centralized technology platform that provides a consolidated view of all purchasing data. Breaking down the silos requires a deliberate effort to align on strategy, define workflows, and maintain open lines of communication.
Effective collaboration turns a transactional relationship into a strategic partnership. When finance understands procurement's impact on operations and procurement understands finance's cash flow objectives, they can work together to achieve greater business goals.
Establish shared objectives and KPIs
The first step is to move beyond department-specific goals and define shared metrics for success. Instead of procurement focusing solely on purchase price and finance on payment terms, both teams should align around a more holistic metric like total cost of ownership (TCO).
Shared KPIs to track include:
- Spend under management: The percentage of total company spend that is actively managed through the procurement process. A higher number indicates better control and visibility for both teams.
- Cost savings and avoidance: Jointly track savings from negotiated discounts (procurement's role) and early-payment discounts (finance's role).
- Purchase order (PO) cycle time: Measure the time from requisition to PO approval. A shorter cycle time is a win for procurement's speed and reflects finance's efficient approval workflow.
- Invoice accuracy rate: A high accuracy rate means purchases are being made correctly from the start, saving finance significant time on reconciliation.
Implement regular cross-functional meetings
Communication improves when it’s intentional. Schedule weekly or bi-weekly meetings between key members of the procurement and finance teams. Use this time to review progress against shared KPIs, discuss upcoming large purchases, analyze departmental spending against budgets, and address any process bottlenecks.
These meetings should be forward-looking and strategic, not just focused on resolving current payment issues. This creates a forum for proactive problem-solving and ensures both teams are aligned on priorities before major purchasing decisions are made.
Standardize the purchase-to-pay process
A clearly defined and documented workflow is essential for eliminating confusion. Procurement and finance should collaborate to map out every step of the purchasing lifecycle, from initial need identification to final vendor payment.
This standardized process should clarify:
- How employees submit purchase requests
- The criteria for different levels of approval
- How new vendors are vetted and onboarded
- The steps for receiving goods and processing invoices
Defining these rules removes ambiguity and empowers employees to make purchases confidently, knowing they are following an agreed-upon procedure that satisfies the requirements of both procurement and finance.
The role of technology in bridging the procurement-finance gap
Technology, specifically a unified procurement and finance automation platform, bridges the gap by centralizing data, automating manual tasks, and enforcing financial controls directly at the point of purchase. It provides the shared infrastructure needed for true collaboration.
While process changes and meetings are important, they are difficult to scale without the right technology. A central platform acts as the connective tissue between the two departments, ensuring everyone is working with the same information in real time.
Centralize data for a single source of truth
A unified platform consolidates all procurement and payment data into one accessible location. This eliminates the problem of disparate systems and creates a single source of truth for every transaction. Both teams gain complete spend visibility from the moment a request is made.
With a platform like Order.co, finance leaders can see real-time spend as it happens, not weeks later when invoices arrive. They can analyze spending by department, location, vendor, or GL code, enabling more accurate budgeting and forecasting. Procurement gets a clear view of order statuses, delivery times, and vendor performance across the entire organization.
Automate procurement and AP workflows
Automation is the key to removing manual friction from the P2P process. A modern procurement automation strategy digitizes everything from purchase requisitions and approval routing to order fulfillment and invoice processing.
Platforms like Order.co automate these critical steps:
- Custom approval workflows automatically route purchase requests to the right approvers based on department, budget, or dollar amount, speeding up approvals without sacrificing control.
- Automated GL coding ensures all purchases are correctly categorized from the start, eliminating a massive manual burden for the finance team during month-end close.
- Consolidated billing reduces hundreds or even thousands of vendor invoices into a single, consolidated bill each month, dramatically simplifying the payment process for finance.
Enforce compliance and budget controls proactively
One of the biggest benefits of a unified platform is the ability to enforce financial policies before a purchase is made. Instead of discovering maverick spend after the fact, finance can set up proactive controls.
With Order.co, businesses can:
- Create curated catalogs with pre-approved products and preferred vendors, guiding employees to make compliant choices.
- Set dynamic budget controls by user, role, department, or location to ensure spending stays within limits.
- Enforce approval rules that prevent out-of-policy purchases from ever being placed.
This gives finance the control it needs while empowering employees with the autonomy to purchase what they need to do their jobs, creating a win-win for both sides.
The Procurement Strategy Playbook for Modern Businesses
Learn the key pillars of a strong strategy, valuable procurement metrics to track, and initiatives you can start implementing today.
"*" indicates required fields
A 4-step playbook for building a strong relationship between procurement and finance
Building a strong relationship between procurement and finance teams requires a structured approach. You can get started by conducting a joint process audit, defining a unified technology strategy, creating a communication plan, and continuously measuring performance.
Follow these four steps to create a durable and effective partnership between your procurement and finance teams.
Step 1: Conduct a joint process audit
The first step is to understand your current state. Leaders from both procurement and finance should sit down together and map out the entire procurement process as it exists today. Identify every touchpoint, from the moment an employee identifies a need to the moment the vendor is paid. This exercise will quickly highlight redundant tasks, communication gaps, and key pain points for each team.
Step 2: Define a unified technology strategy
Armed with insights from the audit, both teams can align on the need for a better solution. Instead of searching for separate tools for procurement and accounts payable, define the requirements for a single platform that serves both. This is the core of a modern procurement management system. The ideal solution should provide an easy-to-use purchasing experience for employees, robust strategic sourcing tools for procurement, and comprehensive spend controls and automation for finance.
Step 3: Implement a communication and change management plan
Deploying a new process or platform requires buy-in from everyone. Develop a clear plan for rolling out the new system. Conduct joint training sessions with both teams to reinforce the idea of a shared process and shared ownership. Highlight the specific benefits for each department — less manual work, faster approvals, and better data — to encourage adoption.
Step 4: Measure, optimize, and celebrate wins
Once the new process is live, use the platform’s analytics to track your shared KPIs. Hold regular review meetings to discuss what’s working and identify areas for further optimization. Most importantly, celebrate your successes. When you hit a cost-saving goal or reduce your invoice processing time, share that win across both teams to reinforce the value of your collaboration.
Unify your procurement and finance teams with Order.co
Order.co is the only AI-powered procurement and finance automation platform that unifies the entire purchase-to-pay lifecycle — from requisition to reconciliation — in a single, intelligent system. Unlike disparate spend management tools or corporate cards that only address a piece of the puzzle, Order.co addresses spend at its origin: the point of purchase.
By combining a guided B2B marketplace, procurement automation, and automated AP in one platform, Order.co provides the shared infrastructure that finance and procurement teams need to collaborate effectively.
- For procurement: Centralize all vendors into a single, curated catalog. Automate sourcing with AI-powered strategic sourcing to find the best products at the best prices, and streamline the entire requisition and fulfillment process.
- For finance: Gain 100% real-time spend visibility. Enforce budget and policy controls before purchases happen. Eliminate manual data entry with automatic GL coding and receive consolidated bills for all purchases across all vendors each week or month.
Ready to break down the silos between your procurement and finance teams? Schedule a demo to see how Order.co creates a single, streamlined process that drives efficiency, control, and savings for your entire business.
Get started
Schedule a demo to see how Order.co can simplify buying for your business.
"*" indicates required fields
