Ensuring Financial Control in the Purchase-to-Payment Process: A Case Study of a Diversified Manufacturing Group

Abstract

Manufacturers continually involve themselves in a purchase-to-payment cycle that encompasses procurement, purchase orders, goods and services receipt, invoice verification and payment, and the financial control over this cycle rests on the co-ordination between procurement and Finance. This case study looks at the purchase-to-payment process of Roots, a diversified manufacturing group in Tamil Nadu that spans automotive solutions, cleaning solutions, casting components and plastic moulding, with first-hand exposure to the Finance function during an internship. The analysis discovers that the financial processing is based on a timely and accurate flow of information from procurement and operations, and a delay or discrepancy at any one stage - purchase order, goods receipt or supplier invoice - cascades to Accounts Payable and payment. SAP-based processing is discovered to be the integrating mechanism that links these stages, and enables verification and reporting. The study suggests strategies including stronger co-ordination, standardized documentation, fuller use of SAP, timely invoice verification and MIS process monitoring, concluding that financial control in high-volume manufacturing environment is achieved through coordinated processes across the organization rather than the Finance function.