As they continue to face inflationary pressures and the need to comply with regulations that require increasing amounts of data, CFOs are looking for ways to smooth both costs and efficiencies in their businesses.

Working closely with the procurement team can help finance chiefs add value, but this requires a shift in thinking among CFOs as well as the remainder of the C-suite, said Scott Macfee, CEO of software provider SpendHQ. Macfee joined the Atlanta, Georgia-based company, which provides spend intelligence and procurement solutions to businesses, as its CEO in July 2021, according to his LinkedIn profile.

“The CFOs want to know how you're going to drive efficiency and how you're going to take costs out,” he said in an interview. “They want to know how our tool sets can give them the visibility, and almost the oversight of what procurement is doing to drive those goals.”

Getting finance and procurement into alignment

Procurement — which typically involves the business processes that surround obtaining goods and services, including relationships with vendors and suppliers — has been an underserved function for years, often “viewed as kind of the cost control mechanism, not the strategic enabler of business,” Macfee said.

For CFOs, who are concerned with cost management, profits and loss, that view of procurement can often put them at cross purposes with the chief procurement officer, who is keeping their focus on value creation in a way that may not translate directly to the business’ bottom line, according to a recent study by Deloitte.

However, recent economic headwinds have put a spotlight on the drawbacks of keeping finance and procurement siloed, Deloitte said. Issues such as supply chain challenges, for example, have given the two teams more reason to work closely in order to ensure resiliency in this area in the face of disruptions such as manufacturing delays or rising costs.

The current economic climate has led to a shift in how not only the CFO, but the C-suite broadly is coming to view procurement as a strategic player, Macfee agreed. To weather murky economic conditions, companies can either sell more — which is tricky amid persistent cost pressures — or slash expenses, which is “the sweet spot of what we do,” he said.

“So more and more, we're seeing the C-suite lean on procurement, giving them that proverbial seat at the table, and … really chartering them with having a bottom line impact,” he said.

Bringing the CFO’s perspective into procurement is a critical part of creating space for it to act as a strategic player. While SpendHQ still typically interacts with chief procurement officers, the company has been working to bring CFOs in as well, “because when you build that alignment, that deal moves much quicker,” Macfee said.

“So for the CFO, we show them how you're going to be more efficient, and then we show them how you're going to get real-time savings,” he said. “And then the most important aspect is, when we set those targets, or when our customer sets [them], it's aligned with finance,” he said.

Creating space for data

Both CFOs and CPOs are still dealing with ongoing macroeconomic frictions; inflation, geopolitical uncertainty and supply chain resilience remain top concerns for CPOs, Deloitte’s study found. As well as juggling those headwinds, executives also need to ensure their organizations are well-prepared to comply with new regulations that require increasing volumes of data, such as incoming environmental, social and governance requirements.

New regulations such as the Securities and Exchange Commission’s climate disclosure rule have brought ESG to the forefront of CFOs’ minds, and procurement has a key role to play when it comes to both complying with such rules and executing on ESG initiatives that may be put in place by businesses.

Let’s say a company has a corporate mandate to drive a certain percentage of spending to diverse suppliers, for example, Macfee said. That would be impossible to do without having the baseline data surrounding diversity and vendor information, which lies in the realm of procurement.

However, in order to aggregate the growing volumes of data required for such initiatives, the technology stack needs to be elevated. Ultimately, “it all starts and ends with data,” Macfee said.

“It starts with merging that fragmented data into a coherent set that procurement and finance organizations can collaborate with to drive actionable insights,” he said.