While Accounts Payable (AP) and Procurement are distinct functions within a business, they are closely intertwined and work together seamlessly.
Here's why:
- Procurement focuses on sourcing and acquiring goods and services. This includes identifying needs, selecting suppliers, negotiating contracts, and placing orders.
- Accounts Payable manages the payment process for those goods and services. This involves receiving invoices, verifying their accuracy, processing payments, and reconciling accounts.
Here's how they work together:
- Procurement provides the data that AP needs to process payments. This includes information about supplier details, purchase orders, and invoice amounts.
- AP ensures timely payment to suppliers, which helps maintain good relationships and ensures continued supply. This is crucial for procurement's ability to source goods and services.
Here's an example:
- Procurement negotiates a contract with a supplier for office supplies.
- Procurement places an order for those supplies.
- The supplier sends an invoice to AP.
- AP verifies the invoice, matches it to the purchase order, and processes the payment.
In essence, Procurement is responsible for getting the goods and services, while AP is responsible for paying for them. They are two sides of the same coin, working together to ensure a smooth and efficient supply chain.
