Purchasers discuss their working relationship with CPAs and accountants. (CPA in Industry)by Schnebelt, Derrick
A group of purchasers, who also are members of the National Association of Purchasing Management (NAPM), were interviewed to give their views on their accounting cohorts. These purchasers come from various business sectors across the U.S. The purchasers discussed their working relationship with accounting professionals, giving some insight on how they can better understand each other and work better together. Because every organization recognizes their accountin staff by various names (i.e. CPA, accountant, finance, controller), we will refer to the individuals and the departments as accountants or accounting.
Understanding Each Other's Role
From the conversations with the purchasers, it was apparent that the relationship between purchasing and accounting varies from organization to organization. Historically and stereotypically, according to the purchasers, there has been an adversarial relationship between purchasers and accountants. "Years ago, purchasers only met with accounting occasionally," said Karen Hawes materials manager with Epoch Systems. "But that was only for major items or whe things went wrong."
One retired purchaser said that not understanding each other's job function is just part of the misapprehension. He said that purchasers and accountants need to understand the goals of their company. Once the overall goals and objectives of the organization are understood, it is easier to see how each department contributes to achieving these goals. "Just as purchasers and companies must partnership with outside suppliers," he said. "these two departments must also partner with each other and with other departments they work with on a regular basis."
Silas L. Carter, director of corporate administrative and operations services with Pitney Bowes, said that sometimes the rules in purchasing differ and are not as clear-cut as accounting policies and procedures. "Once it becomes apparent to both the purchaser and accountant why things are done by each professional," said Carter, "then they are able to negotiate a set of procedure that are suitable for both." Carter said the purchaser's role has to allow for flexibility.
Too Much Focus on the Dollar Bottom Line?
Without diminishing the importance of budgets, many of the purchasers felt that most accountants focused too much of their efforts on the bottom-line dollar amount.
"While accountants may be focused on the dollars and cents of the issues and what that represents in terms of funding, sometimes purchasers need to better communicate to accountants what the requirements are of the user organization (whoever is going to be using the goods or services that your organization is purchasing), said John Semanik, contracts manager with Sun Microsystems. "If th accountants have a level of appreciation for why the expenditure is being considered in the first place and the requirements behind it, they'll be able t reason and understand its importance."
"Clearly, accountants focus on the bottom line dollar amounts--and they should, said Ray C. Stark, vice president of materials management with Allied Signal. However, Stark didn't think the job should stop there. He said in many larger organizations the accountants are taking a much more proactive role in the materials function, such as controlling total costs. "Accountants are a critica part of the process to ensure the operational game plan that has been put into place is having the impact that was expected," said Stark. "Not only are they checkpoints to ensure that your organization's numbers are right, but they also make sure that the financial variables and alternatives are understood."
The purchasers agreed there needs to be controls |by accountants within organizations. The controls, however, must be sufficiently restrictive to assur that purchasers adhere to company policy and financial objectives, but sufficiently flexible so purchasers can respond to changing conditions and customer needs.
Communication--The Key to a Solid Relationship
One important element to this relationship's success is communication. Many admitted this is an often overlooked area, but is essential to maintaining and building a better relationship with accounting. Although some purchasers said they could improve in this area, they discussed some examples involving the accountants.
A major concern expressed by some of the purchasers was the unilateral actions by accounting staff without informing the purchasers. Whether the accountants' intentions were good or not, sometimes the results are disastrous. Pricing was an often mentioned example. One purchaser noted an incident where he had prepared an extensive report to explain why various items should be purchased a particular price levels. The accountant, after examining the information supplied by the purchaser, thought it was too complicated. The accountant then changed the figures on a straight percentage basis across the board, and did no inform the purchaser of the change. In the end, the head of manufacturing condemned the purchaser for not researching and preparing a thorough report.
The purchasers felt these types of unilateral actions by accountants cheated th purchasers out of their ability to make decisions. In some cases, it put the purchasers in awkward situations.
Another purchaser noted a change in payable due dates--where accounting shifted from a 30-day net to a 45-day net payment cycle. The purchaser said this 'stretching' of dates, if not properly communicated, can hinder the purchaser's relationship with his or her suppliers.
"I see the communication process between accounting and purchasing as more than just a two-way scenario, said Semanik. He added, "It's more of a three-way process: accounting, working with purchasing, and the end user." Semanik said that getting that third dimension of the end user involved stimulates the relationship between accounting and purchasing. Then accounting usually understands that purchasing is fulfilling a vital role in achieving the company's objectives.
Perceptions or Misperceptions
How do accountants perceive purchasers? One purchasing professional felt accountants viewed purchasers "as being too loose in following procedures and i record keeping." Another purchaser said accountants see purchasers always failing to negotiate the best possible price each time and just accepting the supplier at face value, regardless of a price increase. Another comment was tha purchasers are not sensitive to accounting's needs and they always favor and support the suppliers. Whether these perceptions are accurate or not, the above examples give some insight to how some purchasers feel they are being perceived by their accounting colleagues.
A Changing Relationship in a Changing Environment
As times change, so has the purchaser/accountant relationship. In the past five to ten years, the scene has changed from separate functional departments to mor of a team environment within corporations and businesses. Purchasers and accountants are asking more questions and interfacing at a much more active basis at all levels of their organizations.
"The accountants are willing to listen to suggestions," said Joan R. Benner, purchasing manager with Reynolds Metals Company. "They also assist in the streamlining of the overall process. Within our organization, we work in a cooperative effort. The fact that we don't work in an adversarial atmosphere, slowdowns in the procurement of materials are avoided."
"They're (accountants) the financial watchdog of our organization," said Sun Microsystems Semanik. "Sometimes end users think purchasers are the financial watchdogs of any given transaction--and the purchasers are trying to get the best price possible. At my company, purchasers look more at the total cost of acquisitions, not just price. Its nice to have accounting as a support to ask whether we are getting the best bang for our buck."
Both professions are learning more about each other's function. Educational programs, internal and external, are becoming more frequent. "We have the accounting person sit in on all our purchasing staff meetings," said Warren Norquist, vice president of purchasing and operations with the Polaroid Corporation. "Our organization has internal purchasing training programs that all new accountants must attend. Through these programs, the accountants better understand the role of the purchaser within our organization. Our purchasers also take familiar internal programs learning more about the accountants' role. We make use of the finance person as part of the procurement team."
As far as the future is concerned, the purchasers spoke positively about their accounting colleagues. The purchasers feel that this relationship will continue to grow closer and stronger as these professions learn and understand more abou each other and their functions.
Here is an action list to better enhance the purchaser-accountant relationship:
* Better understand each others' role within the organization. Understanding the other individuals'/departments' role gives better insight into how they function to meet the organization's goals.
* Be open to the others' viewpoints and ideas. Why did they perform the task that way? Be open and listen to the others' thoughts and ideas. Sometimes their decisions are based on things besides the bottom line dollar amount.
* Communicate. Although often overlooked, this could be the single most important vehicle to avoiding conflict within organizations.
* Be upfront and honest. Remember, you are on the same team.
* When appropriate, include each other in the decision making.
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