Shifting the mindset: why accounts payable needs to own the supply chain

September 29, 2020 Jonathan Laverentz

I've been thinking a lot about the challenges different companies are facing as they come out of the organizational crisis caused by the initial impact of the pandemic. I spoke with Rock Persaud at Take-Two Interactive a couple months ago and heard how he proactively planned for a crisis. But I've come to realize that Rock is more the exception than the rule. Most organizations are proactive when it comes to internal crisis planning, but that same  proactive spirit seems lost on their approach to supply chain continuity. 

In many cases, organizations were caught unprepared to handle business as usual with a distributed workforce. They were forced to rely on external organizations to provide plans for business continuity in order to overcome the unique challenges brought upon them by the pandemic. In other words: they were reactive. 

My greater realization was that managing and supporting the supply chain throughout the crisis seemingly only concerned the c-suite and procurement teams. Ostensibly, accounts payable was largely left out of the conversation. What’s more, it feels like they didn't raise their hand to be included.

It left a question resonating in my mind. Why does accounts payable feel so far detached from the supply chain? Personally, I feel it comes down to the fact that accounts payable pros feel as if they’re merely a tactical, back office payments organization. It’s no wonder they feel undervalued. Even a recent Ardent Partners’ report revealed that just over 50 percent of businesses feel accounts payable is valuable to organizational operations. 

When you explore accounts payable reach, this perception couldn’t be further from the truth. Accounts payable is deeply and intrinsically tied into the supply chain and thus the success of the business. The work of accounts payable matters.

Accounts payable are the only team within the organization that addresses 100% of the supply base. They alone can influence supplier relationships, and through their action or inaction can radically impact how sellers view the organization.

Think supplier relationships aren’t critical? You’d be wrong. Suppliers can make or break whether you have the goods and services you need to continue to do business. 

How are you going to finish that widget without that critical part? How is your product getting to its destination when there are logistic challenges? How are you going to communicate when you have no power?  Most companies answered these questions during the crisis. And they didn’t like what they found.

So, when you think about operational risk, what greater risk is there than failing to pay bills? The upstream effects can be catastrophic to suppliers—and your buyers, too. A failure to meet standard payment terms has the potential to disrupt an entire supply chain. 

If you consider data as well, accounts payable holds many of the cards yet again. When performing spend analysis where do you think all that data comes from? Accounts payable. Forecasting? Yup, accounts payable as well. All spend goes through accounts payable, it’s a gold mine of data just waiting to be unlocked. 

Accounts payable teams, it’s time to embrace what a genuinely critical component of the supply chain you are. You have the power to make or break your supply chain resilience during business as usual or a crisis.  You are the overlooked collaborative channel between your organization and your suppliers. 

It’s time to get in the game. It’s your supply chain too. Own it.

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About the Author

Jonathan Laverentz

Jonathan is responsible for the global commercialization, messaging, positioning, GTM strategy, and evangelism of the industry-first curated B2B marketplace – Tradeshift Buy – and the end-to-end procure to pay solution that enables one of the newest innovations in the analyst-recognized leading financial PaaS, Tradeshift. Prior to Tradeshift, Jonathan worked at ChannelAdvisor, Channel IQ and Bosch Power Tools North America.

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