The Key to Aligning Accounts Payable and Procurement

Although procurement and AP are different stages of the same process, both areas tend to operate in silos, observes Katrina DeProfio-Carroll, a P2P global process owner. While the two departments’ day-to-day goals and the metrics they measure success with differ on the surface, they both have the same overarching objective — to make sure the organization has what it needs when it needs it, which necessitates keeping the vendors happy by paying their invoices on time.

DeProfio-Carroll realized that the disconnect between departments in her organization was creating issues, and began by opening lines of communication. Those conversations ultimately informed process improvements designed to relieve pain points on either side of the aisle, but she notes that the important first step was listening and not taking those critiques personally.

Katrina M. DeProfio-Carroll
Senior Manager, Business Accounting Process, Global Finance Shared Services, CommScope

Katrina M. DeProfio-Carroll is the Senior Manager of Business Accounting Process for the Global Finance Shared Services team at CommScope. She is also the Global Process Owner for P2P with a focus on Accounts Payable. She has over 25 years of experience in the AP arena, with the past 10 years focusing on vendor master policies & procedures, master data governance and most recently, AP process improvement.

Royce Grayson Morse

Royce Grayson Morse has been working with IOFM for the past eight years, writing and editing content about Accounts Payable, Accounts Receivable, automation, and industry trends. She has worked on the IOFM Certification Guides and written the associated examinations; edits the annual 1099 and 1042 Master Guides; conducts podcasts; and manages the IOFM.com website content.

Transcription

Grace Chlosta: Welcome to the IOFM podcast. This is a podcast for accounts payable and accounts receivable professionals who want to stay in the know with current AP and AR trends and ideas. We'll be interviewing professionals in this space on a wide variety of subjects, including automation, artificial intelligence, career growth, compliance, leadership, and much more.

Today we'll be interviewing Katrina DeProfio. Katrina works for CommScope, Inc., as the Senior Manager of Business Accounting Process for their Global Finance Shared Services team. She's the global process owner for P2P with a focus on accounts payable. She has over 25 years of experience in the AP arena, with the past ten years focusing on vendor master policies and procedures, master data governance, and, most recently, AP process improvement.

00:00:58

She'll be interviewed by Royce Grayson Morse, Managing Editor at IOFM. Royce has been working with IOFM for the past nine years, writing and editing content about AP, AR, automation, and industry trends. She has worked on the IOFM Certification Guides and written the associated examinations, edits the Annual 1099 and 1042 Master Guides, conducts podcasts, and manages the IOFM.com website content. 

Royce Morse: Hi, Katrina, and welcome to the podcast.

Katrina DeProfio: Hi, thank you for having me.

Royce Morse: Yeah, I'm looking forward to our conversation.

Katrina DeProfio: Me, too.

Royce Morse: So what I was hoping to talk about today was kind of aligning accounts payable with procurement, because I know you have experience doing that. Let's start out just by – if you can, just tell me, in your experience, where the disconnect happens between those two functions.

00:01:56                     

Katrina DeProfio: Sure. I think, organically, it happens because for – and I'm not sure the design of this necessarily, but I think it really stems from both teams operating in silos. So you have procurement that has its focus or goals focused around much different areas than, say, accounts payable does. And so I think, organically, for many, many, many moons, at least since as long as I've been in the business, they're typically two different teams. It often stems from each team having a real lack of understanding of what the other does. Even as far back as I can remember, "All AP does is pay the bills. All procurement does is have to" XYZ – you can fill in the blanks there, and it's just making these broad-based assumptions about what the other does.

00:02:53

So I think that's kind of where it stems from. 

Royce Morse: Yeah, I think the siloing thing is a big issue. It's something that we hear at IOFM quite a bit. You had mentioned at some point that both procurement and AP have different goals. So what are those different goals? We can talk about the differences, but I'd also like to talk about, after that, where those things sync up. So let's start with the differences between the two.

Katrina DeProfio: Right. So I think that – now, I'm not a procurement professional; I'm just in the P2P global process ownership role for my company, and I focus more on the AP part of it, just making sure we are part of the conversation and the workflow, part of the team, but I do know – again, from years of experience and working with procurement – that their goals can often be focused or more aligned to faster cycle times and their cost savings, and minimizing maverick types of spend, a focused on how they can streamline their processes, vendors relationships and things of that nature.

00:04:08

Whereas, AP, on our side, we're focused a little bit differently, on: How long does it take us to process the invoices? How many exceptions do we have? Where are invoices getting caught up in the system? What are our KPIs? What is our DPO (our days paid out)? So, where our focus is just a little bit different, on: How fast can we get these invoices in the system? And how fast can get 'em paid? Or, what are the payment terms? Are we abiding by those processes? They [do] not necessarily, on the surface, look like aligned goals, but along the way, when you start examining the process, from the actual procuring to the paying, you can see a lot of areas where they should align because both have significant impacts on each other, if that makes sense. 

00:05:01                     

Royce Morse: Yeah, absolutely. I get that. It's a continuum, really, isn't it? Procurement is at the front part of that, and then they hand it off to AP. So it's helpful if everybody's on the same page, although I know that isn't always the case. Let's talk about what stuff procurement tends to be more focused on. What, in your experience, is their perception of AP (aside from the fact that they just pay bills)? Do they have a positive, a negative, a neutral attitude toward AP? How do they view it?

00:05:44                     

Katrina DeProfio: I can only speak from my experience. I've worked in very small, mom-and-pop-type companies, to the company I've worked for, for the past ten years now, which is a large tech company. I've seen it. I've seen oftentimes there's that adversarial relationship between procurement and AP, and that flows in both directions. So sometimes it's not a pretty picture because procurement wants to maintain their relationship with the vendor, and if the vendor is not getting paid on time – and that's usually the biggest gripe is the vendor wants their money, and they want it within the payment terms; otherwise, fees and other things can happen.

Essentially, the APs being the last piece of that workflow or workstream, if the vendors don't get paid on time, it's going to impact the relationship that the buyer (or whoever in the business has the relationship with the vendor). It can negatively impact that relationship, and then it negatively impacts the view of the company itself, right? So there's a bigger picture that's there, too. 

00:06:56

Oftentimes, it can be pretty negative. The points of contention or the pain points can vary. They can vary from who's responsible, if there's a quantity or a price discrepancy, who's responsible for fixing those things? Is it AP, or is it procurement? Depending on the size of the company – the smaller the company and the more hats you wear, that can get a little tricky. And even in the large companies, that can also be difficult to navigate and then decide who owns those roles. 

Royce Morse: Have you ever run into a situation where somebody in procurement tells you all in AP, "Do not talk to my vendor; I will do all of the talking"?

00:07:48                     

Katrina DeProfio: Sure, absolutely. I have definitely come across that, where because they're trying to maintain that relationship, they don't want AP speaking for them. The other thing, too, is you don't want AP holding the company accountable for something that they really don't have the responsibility to hold them accountable for. What I mean by that is – I'll give you a perfect example. So sometimes we'll get these forms when you want to onboard a new vendor and they say, "Fill out this form." Oftentimes, those forms can contain language around terms and conditions. Well, AP has no authority – at least in our company – to sign on behalf of our company and agree to terms and conditions. That's usually somewhere in the procurement department, the buyer, or whoever has that relationship, because they also have the negotiating power. They also have the authority to sign on behalf of the company. So clearly identifying those roles, and then you can understand and set standards around who can talk to them, who shouldn't. Do you fill these forms out? Do you not? Do you have a set process around roles and responsibilities? I think that helps mitigate that issue.

00:09:05                     

Royce Morse: So on kind of a pragmatic level, a kind of day-to-day level, let's say, as an example, you get an invoice where the pricing looks wrong, and you're not sure what to do about it. How would you approach a situation like that, talk to the procurement folks?

Katrina DeProfio: Sure, right. The company that I work for, we ran into that for a long time. Then the company made a decision, as they were growing and got larger and larger, "Okay, listen, we really have to come up with a process. How do we define roles and responsibilities? And then how do we hold the people that have those roles and responsibilities accountable for what needs to be done?"

00:10:02

One of the biggest tools is automation, which I know is not always easy for all companies, because the smaller companies maybe don't want to invest int that. But for larger companies, for sure; there's an investment in software or an integrated ERP system where you can automatically assign a workflow. I don't know if this makes sense, but in our company, we use VIM, which is SAP's vendor invoice management system. So if we get an invoice that comes in and there's a price discrepancy, it has to go to the buyer, because the buyers are the only ones who can actually touch the purchase order to update it, to correct a pricing discrepancy. 

00:10:46

Now, smaller companies, that might be different. But I would say, again, defining the roles and responsibilities up front, so when that invoice comes in and there's a price and quantity, you know exactly who to go to, to update in the system, or know who to go to get – I remember, back in the day, I was with a smaller company, and we did everything manually. It wasn't a system that I could go in and update or work with. So it was handwritten on the invoice and then approved by someone. So, for sure, defining roles and responsibilities. 

Royce Morse: Right. That makes a lot of sense, obviously, because that way it benefits the vendor, too, because they develop that relationship with typically a person in procurement. When that person tries to reach out, they will respond. They know who it is. They have that working relationship, so they're eager to interact and get whatever it is resolved. Whereas, if they get a call from some random person in AP, they might not want to communicate with them for whatever reason.

00:12:00                     

Katrina DeProfio: Right. And as the buyer, what I've heard, too, from feedback from procurement is they want to know. "Hey, look. I negotiated this price. The invoice is coming in at a different price." If the buyer doesn't know, they can't have that conversation with the vendor. They certainly don't want to know after the fact.

Royce Morse: That makes a lot of sense. So let's take this up to a high level now. If you've got AP that's on the tail end of the process, trying to pay the invoices and make sure they're accurate and get the money out the door so that the vendors are happy, and you've got procurement developing those relationships and maintaining an understanding of what the organization needs at any time, and what needs to be bought, in what quantity, and where the best pricing is and all of that stuff, how do you get those two functions aligned? Even though they're part of the same process on a continuum, there's that disconnect in the middle. How do you bridge that gap?

00:13:03                     

Katrina DeProfio: Communication. Honestly, that's where we had to start. We literally took – oh, probably a week, and this was a few years ago, when we finally said, "Okay, enough is enough." There was a lot of contention between the two. We did start, and we got all the different levels in a room. First we had to get the buy-in from executive leadership. We just said, "Can we sit down and have a relationship conversation?" We didn't want it just from the 20,000-foot view with the executive level, because they're not in the day to day. They may hear complaints, but they're not doing the actual work.

00:13:44

So we got everybody in the room, and it took several days, and we walked through the process. But that's where it started was communication, to say, "Hey, we're not going to sit here and point fingers. We want to have the conversation from the top all the way down, and down all the way back up, and have a real conversation with: What are your pain points? Where's your frustration? Let's identify it." In some areas, it was common. We could see that the frustration clearly was on both sides. And then we had real conversations around each pain point, and how do we address the pain point, whether that is just a lack of communication, or we just need a standard procedure around it. 

Royce Morse: That makes a lot of sense. It seems obvious enough, but I think a lot of organizations struggle with that a little bit.

Katrina DeProfio: They do. Over the years, too, sometimes it's really just being willing to have the conversation, and then becoming that person that they know they can come to for help.

00:14:49

And again, when you have standard processes and procedures, sometimes people get aggravated with that, too, and they just want someone to talk to. So being a little bit flexible in that area as well, saying, "Hey, listen. I have a problem. Can you just help me solve it?" And then we can talk through it and then point them to the process or the procedure, and that always helps. So being willing to have real conversations and take the criticism, and not take it personally – because it really isn't personal, but we get very defensive of our teams and we get very defensive of our processes, but be willing to hear, "Hey, maybe it's not always perfect, right? It's a work in process. We'll take the feedback on both sides and hopefully be able to work together to improve." 

00:15:40                     

Royce Morse: Yeah, I think you make a really, really important point there, which is: Before you try to implement a process change or put a procedure in place to resolve an issue, you need to just let the other side of the operation vent a little bit and listen – just listen, because there may be information there that you need in order to resolve the problem on your side, or vice versa, and not just jump to: "Okay, let's map this process and automate it." Or, "Let's develop and write this procedure step by step," without fully understanding all of the nuances of what the problems really is.

Katrina DeProfio: Right. And probably the catch phrase that we hear often is like the "root cause analysis." Let's not blame anybody, but let's get to the root cause, and let's work together to resolve it. That takes time. It takes time and a dedicated team. You will always meet resistance because this is the way we've always done it. We don't like the change. This isn't working for us. Just because it's working for you – and if it's causing somewhere in the workstream, either before you or after you, a lot of rework or pain, it's really getting them to be on board with the direction that you want to go.

00:17:03                     

Royce Morse: That's true. And if it's working for procurement but it's not working for AP, then the vendor at some point is going to be unhappy, and then it's not going to be working for procurement either. It becomes a bigger problem. You're talking a lot about healthy relationships. I can tell you from my own experience in business that people do tend to get defensive if you point out a problem. Do you have a technique for addressing or bringing up an issue that may be viewed as a sensitive issue? Some people are much more defensive than others. I think you said something really important, which is: don't take it personally. But not everybody can be that detached, in my experience. What's your experience been like with that?

00:17:59                     

Katrina DeProfio: Yeah, so it's been a mixed bag. Especially if you are the one who's put in the time to try to improve the process and somebody's not happy with it somewhere along the line, you do have to take a step back. Honestly, kindness. I cannot overstate kindness. People, whether we want to or not, do bring our personal stuff, even if it's just in our attitude, even if it's just in our demeanor sometimes. It's taken a lot of years' practice. I can't say that I'm perfect. To be an advocate, at least in this sense of the word, that you want to work together and be a team, it's recognizing, "Hey, look. Ultimately, we work for the same company, so ultimately we have the same goals, in that we need to improve whatever that bottom line is," whatever your goals are from the executive level down.

00:19:05

Okay, let's figure out a way that I can show that I'm somebody that can help and not hinder what you're trying to do – and sometimes that just takes really listening to what their problem is, and then taking a minute to breathe before you respond. It took me a long time to write an email, then walk away. That's a key right there. 

Royce Morse: It come with maturity.

Katrina DeProfio: Yeah, sometimes you can get the scathing emails. I, for sure, have been like a keyboard warrior and you type the response – and then I have to walk away. That's one thing that I really do. I walk away. I don't care if it's five minutes, ten minutes, the next day. Then I'll come back and reread it and say, "Okay, my tone's probably a little off. Let's change it." Or sometimes it's picking up the phone, too, and saying: "Hey, can we talk about that? Can we take five minutes and just talk about this? Let's do a check-in."

00:20:03

That's taken years of practice. I'm not going to sit here and pretend like this happens overnight. It doesn't. It's building the relationships. And I think doing what you say is important as well. So if you agree to be an advocate and you agree to resolve a problem, resolve the problem. Or do your best to resolve the problem. Then, the next time it comes around, you show yourself as a dependable partner and that you're willing to meet the objectives, solve the problem, whatever that is. I think that's key as well. But don't be a doormat, either. I don't recommend that. There's sort of a fine line between holding yourself accountable, holding your teammate or partner accountable so that you can both meet your objectives, but also don't compromise too much. 

00:20:57                     

Royce Morse: That's really good advice. So let's go back down to a level now that we've talked about the high-level approach that you take from a human standpoint. What are some of the adjustments you made in your processes? Can you give us an example or two of that?

Katrina DeProfio: Sure. So one of the biggest ways that we were able to overcome some of the problems we had was – I mentioned earlier VIM, which is our vendor invoice management. For most of the globe, we automated our invoice processing. We automated the three-way match. We automated the way our invoices come in. We automated the way the system does the three-way match, and then we developed workflows to move the exceptions to the responsible parties.

00:21:47

You mentioned earlier if an invoice comes in with a price and quantity. Our system intuitively knows now, when an invoice comes in, if there's a price discrepancy, it knows who to route it to. We had to work with procurement and we had to identify those owners on the purchase order itself. We had to align with procurement and identify: Who's the buyer? Who can do the goods receipt? Who's the person actually requesting the purchase? You have to put ownership there. Then, when the invoice comes in, the system intuitively knows: Okay, there's a problem. It has to get routed to the direct person (or group of people) who can actually resolve the problem. Automation, for us, was absolutely key. 

Royce Morse: Yeah, that's brilliant, really. That way, you don't have to try to figure it out. The system already knows where it goes, if there's a problem. I'm going to say that this is not a one-and-done process, right? It seems like it would be an ongoing process-important endeavor to just keep those lines of communication open as the business evolves, as the teams evolve. You have to kind of keep after it, right?

00:23:04                     

Katrina DeProfio: You do. And as software improves – AI is a big one. Bots in our system is a big one. How do you look at repetitive tasks? A lot of people hear about bots and things of that nature and assume it's going to replace the job. But, in reality, most companies are low on resources anyway. So any time that you can have a system improvement or a software improvement that can help improve – and we do take the perspective of: I want my employees to not just be bogged down with repetitive transactions. Again, that's why we pulled in VIM. Most of our teams –

00:23:53

AP has reshaped what an AP processor even looks like today. Back in the day, however many years ago, they were manually entering invoices and it was more of a data-entry position, and understanding the logic or the processes behind what I'm looking at on an invoice, how it has to match the purchase order and things of that nature. That's evolved, right? Our AP teams are a lot smarter today and more involved in analytics and more involved in understanding some of the tax laws depending on the country they're sitting in, depending on the state they're sitting in. So there's all different levels of knowledge or skillsets that our AP teams today have to have that they didn't have to have before. Any time you can automate or improve the workflow using technology is a win. 

Royce Morse: Right. I would say that's brilliant because the stuff that technology takes over is the kind of repetitive work that is mind-numbing and error-prone, just because people get bored or distracted. Automation is really good at doing that. That's kind of where it shines. The things that require more human interaction or more sophisticated problem solving is a better use of people's time and energy, I would say.

00:25:17                     

Katrina DeProfio: Yeah, exactly. We have escalation processes now. We let the system do the bulk of the work, and then, really, what gets weeded out and left for our AP teams to look at are the problems. A lot of the teams like the problem solving or they like the analytics.

Royce Morse: It's a challenge, right?

Katrina DeProfio: Exactly, it's a challenge. It's not the same thing every single day. So what we have found is our teams have actually thrived a little bit better in that environment.

Royce Morse: That's awesome. Well, thank you so much for taking the time to talk with me. I think this was a very productive conversation because I think it does shed a lot of light on how procurement and AP can work better together with the beginning of that process just talking to each other as human beings, and then the rest kind of follows after that.

00:26:09

Thank you so much.

Katrina DeProfio: Absolutely. It was my pleasure.

Royce Morse: I appreciate your time, Katrina, and hope to speak with you again.

Katrina DeProfio: Well, thank you. I enjoyed it very much and look forward to the next time.

Grace Chlosta: Thank you so much for listening to the IOFM podcast. Remember to head on over to the Member Forum to discuss today's episode and provide ideas for our next one. And to stay up to date on IOFM's current events, both in-person and virtually, head on over to IOFM.com.