To support JMP on our journey of separating from SAS, the JMP Finance team uses the "Financial Literacy 101" series to explain basic financial topics and lingo in a way that is easy to understand and beneficial to all.
Procure to Pay (P2P) impacts the entire JMP organization but there are a few stakeholder groups that play important roles in the process. In the Financial Literacy 101 series we try to keep it simple and limit content to three (3) points. In the case of P2P stakeholders, we have four (4) primary stakeholders which are all of equal importance. While there are many tasks going on in the background, we hope the following provides a useful overview of who is involved, when, and why.
Requestor
You, the requestor, identify the need to spend money and must obtain manager approval to engage Procurement for discussion. The requestor is also responsible for communicating the business justification for an expense and what business requirements need to be met. You will manage the vendor relationship and work alongside Procurement in completing the necessary tasks.
Procurement
When a request receives managerial approval, Procurement will look at what is being requested and consider if any of JMP’s existing vendor relationships could meet the need. Once potential vendor(s) are identified, a comparison of offerings and price negotiations begin. Procurement works as an intermediary between the requestor and vendor to ensure the right goods and services are being acquired at the right time and at the right price while protecting the vendor-requestor relationship. After a vendor is chosen, Procurement tries to uncover and address any hot topics in the agreement that Legal will be concerned with.
Legal
During vendor selection, Legal and Operations work together to perform due diligence, privacy checks, and more to identify risks that might prevent JMP from contracting with a vendor. After a vendor is selected and a contract is provided, Legal begins its formal review. Undergoing a legal review is like getting insurance – we can hope for the best but it's critical to have proper coverage if the worst-case scenario occurs. Legal not only performs their review but must work back and forth with the vendor to negotiate terms.
Finance
When an estimated purchase request arises, Finance gets involved to ensure there are no budgetary concerns or approvals needed before proceeding. After a contract is signed the remainder of the process is with Finance. A purchase order must be created and given to the vendor. When the vendor sends a bill, Finance confirms that it matches the PO and that all goods or services were delivered before making payment. Finance also manages JMP’s working capital, which means making conscious decisions about which invoices to pay and when to preserve sufficient cash flow. Lastly, Finance is responsible for accurate and timely reporting of committed spending and expenses.
Why does this matter for JMP?
These departments work collaboratively to support the requestor and JMP; accordingly, any attempts to take shortcuts will cause increased risk and delays. Each stakeholder and their responsibilities are crucial in supporting the P2P process and ensuring JMP continues to thrive for decades to come.
Why should this matter to JMP Staff?
Understanding the stakeholders and their responsibilities should give you confidence that the process is intended to add value. The process also takes time, which means you should be looking ahead and starting the process early to increase the likelihood of meeting deadlines.
Related article:
Financial Literacy 101: Procure to Pay
