Relationship between accounting and purchasing departments

Relationship Between Accounting & Marketing |

relationship between accounting and purchasing departments

Poor relationships between accounting and marketing are common. That is The conflict arises when one of the departments blame the other for any eventual . Apart from the internal close collaboration between departments, firms and meaningful relation between the activities performed by purchasing and . with production, scheduling, logistics, sales and accounting/finance. The purchasing department sends a copy of the purchase order to accounts payable and to the receiving (warehouse) department that will accept the purchased.

A business must be able to market its goods and services, however they must also be able to manage the cost of the marketing and advertising efforts. Marketing Reports The marketing department of a company sets up programs to increase sales via advertising and sales promotions. These can include direct advertising programs such as radio and television campaigns to indirect programs that include involvement in community and public organizations. The marketing department prepares a variety of reports designed to assist management in processes of determining sales strategies that work.

Reports might include gross sales per campaign or even customer hits on a website advertisement. Marketing is always looking for the best way to promote a business within the confines of the company budget. Ratio Analysis Management is always looking at the relationship between sales and costs. These are called ratios.

Purchasing management and internal collaboration -

For example, a typical ratio is the gross-expense ratio. This measures the gross expenses of a company with the gross sales. The gross expense ratio can be further broken down into expenses related to important departments in the company, such as marketing. Accounting and marketing should work closely to monitor the ratios of advertising and marketing expenses to gross sales.

For example, if marketing expenses are increased in a period, but sales remain constant, management may decide that the marketing expenses were inefficient.

Many literature sources across disciplines have described collaboration as interaction, where communication in the form of meetings and information flows are employed to bond departments.

Communication by way of task forces was always an important integration mechanism during the start-up and final stages of product development. Souder defines the interdepartmental collaboration as "A state of high degrees of shared values, mutual goal commitments, and collaborative behaviours Nowadays companies more often send to the markets highly complex products and related services.

It all requires solid external actions but also necessitates close cooperation between departments within the company where everyone has common goals and understands the importance of communicating with others.

Importance of internal collaboration Interdepartmental interaction represents the communication aspects associated with activities performed by different departments within a company.

Such activities address verbal and documented information exchanges between specific sides; therefore they correspond to both tangible and intangible assets of the company.

relationship between accounting and purchasing departments

All the activities should be well structured, clarified and standardized whenever it is possible. If the work division is not clear employees may become confused over their roles in the collaboration processes that can contribute to frustration and serious corporate problems.

relationship between accounting and purchasing departments

Also, if inefficient, collaboration can be time-consuming and can impact negative outcomes i. Therefore it is necessary to define the meaning of collaboration in each company and set the standards for effective information sharing and integration.

The Relationship between Purchasing Department and other Department Essay

As mentioned in part purchasing organization should be the enabler for effective internal cooperation as well as collaborative with other departments i. The concept of cross-functional teams has been lately brought up as an efficient tool to manage expectations of the departments and the company.

While it is fairly simple in theory, its practical implementation is very often difficult. A lot of firms must change their business behaviour and overcome previously established functional structures of reporting and sharing information.

Powerful cross-functional integration requires a corporate culture of participative teamwork within all company's levels and across defined functional limitations. It is important to define responsibilities of purchasing organization and other organization inside the company e. Some of them would be interrelated but the rest would reflect low interdepartmental interaction and low interdepartmental collaboration, since activities would be internal to the department.

Nevertheless, introduction of new products and product changes very often requires collaboration of several departments. In such cases the purchaser's knowledge should be supported by engineers, a development team and sales representatives. It is the common view that provides the best decisions and results. Following the discussion it can be stated that purchasing integration involves the active participation of purchasing in the strategic debate in the corporation and is aimed at promoting the alignment of purchasing practices and goals with strategic business priorities.

Purchasing integration relates purchasing plans and practices to business vision, and shapes senior management's perceptions of procurement's strategic role in the firm. Some of the field researchers, however, argue that sometimes interdepartmental discussion meets a lot of problems. Collaboration is understood as an involved process where employees may not be productive because of time and resource spent to take part in cross-functional training and related activities.

Such actions without immediate results might be undesirable from upper management's perspective. Thinking in terms of transactions, departments are considered to be independent entities that may compete for company's resources, and the collaboration between specific departments is considered to be occasional and cost-incurring. Due to competition and perceived costs, managers view meetings and information flows with other departments as negotiations, where each department tries to get the best deal at the conclusion of the meeting or information exchange.

It is important to point out that the level of purchasing success and the following success of the company depends on the fit between the company's functions.

relationship between accounting and purchasing departments

In case of purchasing initiative, a structure should be established to enable cooperation with other departments. The departments should give each other a mutual support in order to improve overall company's performance. When setting up collaboration processes, issues like division of responsibilities, field support and information sharing should be determined.

By establish the purchasing department's fit into the company's other functions it also creates a support for already established collaboration to improve and deliver outcomes that are in favour for the business performance. Further, it can be observe that the level of involvement of purchasing organization depends on a project and its complexity. Sometimes the internal focus of a project may lie in other departments e.

Despite the less important role of purchasing in some cases, it is still necessary to exchange knowledge and experience in order to successfully complete the project. Purchasing collaboration with other departments within the internal organisation It can be stated that purchasing works as an intermediary between suppliers and the focal company and takes a role of a relationship manager.

It should have the ability to communicate effectively including the potential contributions to design and technology experts internally. It is important to point out that the purchasing department does not have to coordinate all of the contacts with suppliers. In this context, a close collaboration between the departments is crucial.

The purchasing organization may not constantly play a major role but it should always be responsible for supplier selection, contracting and monitoring as well as maintaining right relationships.

The following sections will describe the purchasing department's collaboration with other departments in the organisation. Apart from the internal close collaboration between departments, firms look for supplier capabilities in engineering, design, testing, manufacturing, tooling, delivery and responsiveness. This new approach has been described by Narasimhan et al.

Taking into account this reality, the role of purchasing involvement in product development has increased a lot. More than ever, the interdepartmental collaboration within research and innovation is essential for the company's long-term success and profitability.

Leadership and joint problem solving implemented in purchasing organization are the tools to support developing critical products and process technologies. Purchasing practices may involve extensive investments and development such as quality training for suppliers, organizational change towards integration, developing strong internal ties through membership in strategy development teaming, information sharing, and joint decision-making activities.

What is the Relationship between accounting department and other departments

The total costs tied up into these undertakings may be lowered by an efficient internal collaboration and planning. Further, these benefits can contribute to long-term profits and solid business establishment. For instance, the design for manufacturability can achieve lead-time reduction, better quality, less rework and cost reduction. An effective collaboration between purchasing and product development can lead to better overall materials management in downstream processes inside the company.

However, it can only be achieved when the purchasing involvement and collaboration is managed carefully. Typically, growing degrees of project innovation and complexity are expected to lead to the increasing involvement of purchasers.

The level of purchasing contribution in product development can be diverse e. According to the same author there must exist several factors that drive the need for purchasing collaboration: The presence of an internal organization that is able to support communication and coordination in product development The competences and sills of the purchasers in terms of personnel with the right education, skills and experience; understood as well-established purchasing organization Figure 4 - Configurations of purchasing involvement in product development projects Figure 4 presents different organizational mechanisms that have been suggested to coordinate functional interfaces between the departments of an organization.

Purchasing can for instance become involved in a product development project based on direct collaboration between purchasers or developers and engineers. The purchasing is not really integrated in the project team but is involved occasionally when the support is needed.

Generally speaking, the collaboration may have a dedicated basis purchasers work full time in the development projectsa part-time basis operational purchasing or a coordination role where the project work is supported by the purchasing team from the department. Figure 5 - The regional purchasing office for a regional supply base Figure 5 presents another approach that is common for global companies.

Increasing competition and market requirements put more conditions in many industries. Once, a Dutch manufacturer of copier and printing systems established a regional purchasing office in Asia, in order to reduce time-to-market of new products, decrease costs and intensify monitoring global development activities. Initially, the external supplier base was aimed at investigating the Asian supplier market. However, later it moved towards setting up a purchasing specialist role with the responsibilities of an account buyer and regional purchasing market researcher.