The Key Take Away From Our Webinar

Raphael Nahum, Head of Finance at Pennylane, a rapidly-growing fintech accountancy platform, shared his insights into how procurement and finance can work together, as well as what it takes to build a procurement function from the ground up. 

You can watch the webinar here if you missed it, and in this article we discuss some of the key takeaways from our session.

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What are the risks of not having a procurement function?

Without a proper procurement function in place, things can unravel quickly and expose businesses to risk. Missed contract renewals, poorly negotiated agreements, and compliance gaps (such as legal, security, or GDPR issues) can all arise when spending isn’t managed strategically. 

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If your company is experiencing budget overruns, slow contract approvals, or frustrated employees bogged down by purchase requests, it’s time to formalize procurement. Maybe your finance teams are spending more time processing approvals than analyzing financial performance? These are all red flag signs that procurement should transition from an ad-hoc process to a structured function.

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Why procurement belongs in finance

Raphael explained that Pennylane integrated procurement into finance for two main reasons. First of all, finance owns budgeting and forecasting, making it the natural home for spend oversight. Second, because it has visibility over invoices and payments. That makes it best placed to align purchasing decisions with financial goals and to put proper governance in place over spending.

Interestingly, Raphael found that a model which centralised procurement into finance, with a CFO in charge, didn’t fully meet expectations, highlighting the need for a more agile approach.What seemed like a gain in control at first rapidly revealed itself as an operational bottleneck.

The finance team was dragged into lengthy contract negotiations and approvals, which meant employees were spending lots of time chasing sign-offs. Worse, there was a lack of transparency and visibility over spend, which created frustration across the business. Raphaël realized that finance often intervened too late in the process, with limited visibility on committed expense.

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Why companies hold off on structuring procurement

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One of the biggest reasons? There’s no playbook. Raphael described the importance of experimentation, learning  from each step and gradually shaping a more effective model. Many businesses also struggle to define the ROI of bringing in procurement, especially when it's still viewed as a cost-cutting function rather than a strategic partner. But the reality is that a well-run procurement function speeds things up. It streamlines processes, sources the right suppliers, finalises contracts efficiently, and manages payments smoothly.

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Where to start when building a procurement function

Raphael suggests breaking it down into two phases:

Phase 1: Lay the foundations

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Get internal alignment and make sure the C-suite is on board. Highlight real inefficiencies – like maverick spending or delayed approvals – and show how procurement can fix them. Show what’s not working and explain how a structured procurement approach could solve them.

Phase 2: Build the processes

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Once you’ve got buy-in, define your governance model. Set clear roles and responsibilities across teams. Create standardised workflows and introduce approval thresholds. Then start tracking your progress with the right KPIs.

When you’re hiring into your procurement function, look for people who are versatile, analytical, and understand workflows. They need to be great relationship-builders – both internally and externally – and should be seen as business partners to the finance team, not just back-office support. 

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What are the procurement KPIs that matter?

Raphael uses five key metrics to measure procurement performance:

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1. Addressable spend – What spend can procurement influence?
   
   
2. Spend under management – How much of that spend is actually being managed by procurement?
   
   
3. Procurement cycle time – How fast can you go from request to approval?
   
   
4. Stakeholder satisfaction – Are your internal users happy? Keep improving based on feedback.
   
   
5. Cost savings – Track the actual impact procurement is having on spend.

We also spoke about pitfalls to avoid:

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Don’t overcomplicate. If you're just getting started, keep it simple. Don’t overcomplicate your processes. Focus on being a helpful business partner rather than a gatekeeper. 

Don’t ignore your users. Procurement is about humans. If the process is too slow or too painful, users will find workarounds.

Don’t sell procurement purely as a cost-cutting exercise. Position procurement as a strategic partner, not just the cost police.

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How to choose the right procurement tool

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Raphael used a scorecard with four criteria when choosing procurement software:

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1. Fast time to value – You want a tool that can be implemented quickly and keep up with your evolving business. Legacy tools that take 12–24 months just won’t cut it.
   
   
2. User experience – The tool has to be intuitive and easy to use, or teams will find workarounds.
   
   
3. Flexibility – Your needs will change. Look for tools that let you build and adapt workflows as more departments come on board.
   
   
4. Automation – Integration with accounting systems is essential. You should be able to reconcile invoices and purchase requests with minimal manual effort.
   
   

What to consider during implementation

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Start with a pilot. Test out workflows on a small scale and keep implementation timelines short. Use feedback to iterate and improve. Documentation is crucial—make sure users understand the ‘why’ behind processes, not just the ‘how’. And communicate clearly: define the scope of procurement, identify key actors, and use automation to handle high volumes.

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Final pitfalls to watch out for

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Change management is everything. Procurement is a people business. If stakeholders see you as a blocker, work with them to show the benefits and win them over. Don’t make policies too rigid. Keep listening, keep learning. And always position procurement as a strategic function— not just a cost-cutter.

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If you missed the webinar you can watch it here. If you want to find out how Pivot can help you structure procurement and turn it into your secret weapon, get in touch.

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