Supplychain Team
Jul 10, 2023

Enhancing Supply Chain Resilience: Procurement and Accounts Payable Teams

In today's global business landscape, the collaboration between procurement and accounts payable teams plays a crucial role in managing credit and contract risk within supply chains.

The procurement team is responsible for sourcing goods and services from suppliers, while the accounts payable team ensures timely and accurate payment to vendors. By fostering effective communication and cooperation between these teams, companies can significantly mitigate credit and contract risk, leading to improved supply chain resilience and financial stability.

In this blog post, we will explore the importance of managing credit and contract risk between procurement and accounts payable teams and discuss key strategies to enhance this collaboration.

Understanding Credit and Contract Risk Management in Supply Chains

Credit risk management in supply chains involves evaluating the creditworthiness of suppliers and managing the financial risks associated with purchasing goods and services on credit terms. Contract risk management focuses on ensuring compliance with contractual obligations, minimising liabilities, and addressing off balance sheet risks such as foreign exchange, commodity and delivery timing risk that could impact product cost base.

The Importance of Collaboration between Procurement and Accounts Payable Teams

  1. Supplier Evaluation and Selection: Collaboration between procurement and accounts payable teams enables a comprehensive evaluation of suppliers' creditworthiness. The procurement team interacts directly with suppliers and can gather information on their financial stability, payment history, and industry reputation. Accounts payable teams can leverage this information to assess the credit risk of potential suppliers, negotiate favourable payment terms, and select vendors who align with the organisation's risk tolerance.
  2. Timely Communication: Effective communication between procurement and accounts payable teams ensures the prompt sharing of critical supplier information. Procurement teams can quickly relay any changes in a supplier's financial status, credit risk, or potential payment issues to the accounts payable team. This enables proactive credit management and allows accounts payable teams to take necessary actions to ensure timely payment and avoid disruptions in the supply chain.
  3. Contract Management and Compliance: Collaboration between procurement and accounts payable teams is essential for effective contract management within supply chains. Procurement teams negotiate contracts with suppliers, ensuring that terms and conditions are clearly defined and aligned with the organisation's risk appetite. Accounts payable teams play a crucial role in ensuring contract compliance, verifying invoice accuracy, and resolving any discrepancies. This collaborative approach mitigates the risk of contractual disputes, non-compliance, and financial losses.

Creditvue Enabled strategies for Effective Collaboration

  1. Manage and centralise communication in one place: consolidate regular communication into one channel to a specific purchase or contract and establish pme source of communication between procurement and accounts payable teams. These interactions provide an opportunity to share updates, discuss supplier performance, and address any credit or contract-related concerns. 
  2. Report and foster Shared Risk Awareness: Consolidate understanding of credit and contract risk within the procurement and accounts payable teams. 
  3. Standardise Processes, communication and Documentation in one place: Implement standard processes and documentation for procurement, credit assessment, and accounts payable activities in one dedicated system. Clearly define roles and responsibilities, including the flow of information between teams.

Sign-up for free today and check out how Creditvue can help you.

Continue reading

Our newsletter

Get great curated articles every week.

Combine sections from Ollie's vast component library and create beautiful, detailed pages.
No spam!