Procure-to-Pay and How Companies Are Automating It

Better systems lead to better results, especially for growing companies. A strong procure-to-pay (P2P) process is one of the best ways to speed up and track spending.

But how can you optimise procurement and purchasing? What makes a good procure-to-pay process? How can automation keep spending under control as you grow?

We’ll analyse a successful purchasing workflow. Best methods to streamline the process will also be covered. Finally, we’ll demonstrate how automation may streamline your procure-to-pay process.

What is Purchasing-to-pay?

P2P is how a company finds, requests, and pays for its items, products, and services.

Procure-to-pay is not complete procurement. Purchase, reconciliation, and vendor payment are its focus.

Procure-to-pay excludes strategic sourcing, lifecycle reviews, vendor off/onboarding, and supply chain management.

9 stages to a successful procure to pay process.

A standardised, consistent procure-to-pay procedure in your company is invaluable.

A streamlined workflow lowers maverick expenditure, speeds up the procurement process, improves order and supplier management, and boosts stakeholder satisfaction and productivity.

General procure-to-pay flow:

1. Identify a business need: Stakeholders need products and services to do their jobs. They may assess services or choose the best materials.
2. Request the item/service: The stakeholder submits a requisition or intake form to buy items. Requisitions start approval and procurement processes.
3. Get req approval: All relevant stakeholders or departments approve the demand through a standard process. Finance funds the acquisition.
4. Create purchase order: After approval, the stakeholder creates a formal PO to buy the products. The PO will contain all order processing and shipping details.
5. Receive purchase order approval: After the requisition is approved, the PO should be reviewed and approved separately. This reduces errors, clarifies requirements, and streamlines procurement and reconciliation. The provider fulfils the PO after approval.
6. Supplier delivers the order: The receiving party reviews the delivery for accuracy versus the order. If the goods don’t match the order or meet quality standards, the recipient may reject it.
7. Evaluate vendor performance: Perform a vendor performance review after receiving and reconciling products. This should assess delivery time, order accuracy, product quality, and more. This review can identify concerns for future purchases.
8. Invoice approval: A three-way matching process ensures the delivered products match the purchase request, purchase order, and invoice. Accounts payable can process invoices after invoice matching.
9. Pay the Supplier: The procure-to-pay procedure concludes. The supplier receives the agreed payment per purchase order or contract. Payment of invoices on time might earn the company early payment discounts.

3 procurement-to-payment excellent practices

Improve corporate operations, maximise results, and improve purchasing and payment using three powerful best practices.

1. Standardise all purchase approvals.

Formalising the request and purchase process balances your organization’s need for monitoring and compliance with the desire to support and not hinder staff.

A recorded procure-to-pay:

• Makes it easy for employees to receive what they need. It helps employees stay productive and supported.
• Maintains purchasing supervision and budget and departmental compliance.
• Lowers hazards of ordering from unknown vendors or making unapproved transactions.
• It improves visibility, lowers redundancy, and lets finance track, analyse, and forecast spending.

Your method need not be complicated. It should outline the approval process and requestor expectations. To improve these functions, it should be straightforward to execute, track, and repeat for every purchase and improve the procure-to-pay cycle.

A minimal purchase approval process includes:

• A conventional intake or requisition form containing the needed information.
• First point of contact or process owner for procurement and approval.
• Each purchase has clear approvers and parameters.
• A tracking and documentation system for requisitions and orders.
• Reviewing purchases, developing supplier relationships, and offboarding vendors after service ends.

2. List contract and departmental requirements.

Each department that approves purchase requisitions presumably has regular standards. To reduce risk and ensure excellent procurement, these requirements are necessary. Stakeholders and buyers must know these requirements to meet them. The particular needs will vary by organisation and strategy, but they are crucial to the decision-making process and request outcome.

Possible departmental needs:

• Internal department lead: Tech stack or other partner agreements determine preferred supplier or integration partners.
• Legal: terms or clauses to enforce contract protections for SLAs, downtime, disaster recovery, arbitration, etc.
• Security: Supplier questionnaire for security and risk management parameters.
• Finance: Preliminary budget estimate or project milestone report for forecasting and budgeting.

Document these requirements in one place for easy approval.

Including departmental requirements in the intake process helps stakeholders meet them before a request is submitted. This lowers friction, delays, and ensures high-quality purchases for your firm.

3. Think automation

The purchase process expands dramatically with companies.

Contract management for dozens or hundreds of vendors grows with expansion. Departments quickly process hundreds or thousands of monthly bills across locations. Your manual procure-to-pay procedure gets inefficient quickly.

Automation can handle repetitive and manual processes in your purchase-to-pay process instead of hiring more people.

Using procurement and AP automation can improve buyers’ buying experience and reduce team and department stress. It can free up these crucial teams to perform higher-value tasks in the organisation.

How does purchase-to-pay automation software works?

Centralised procurement software automates item selection and invoice payment.

The front-end cloud-based technology centralises supplier orders and automates buyer purchasing. Users browse a selected catalogue from recognised suppliers.

They can then order things within system budgets and parameters. This dynamic system lets administrators specify expenditure rules by user, department, category, or location.

Procure-to-pay software automates several tedious tasks backend. Catalogue purchases undergo automated approval. The system automatically checks and reconciles invoices after approval and delivery, scheduling payment.

The system routes, reconciles, and pays thousands of bills without worker input using AI and machine learning.

E-invoicing allows integrated purchase payments.

How does procure-to-pay automation helps?

An automated e-procurement system improves your entire P2P operation. By centralising purchases, you meet organisational requirements and simplify daily tasks.

A good P2P solution will:

• Follow budgets, purchasing criteria, and approved vendor lists.
• Optimise supply chain management for multi-location orders
• Reduce invoice exceptions and expense per invoice.
• Consolidate invoices and payments to boost cash flow.
• Help find cost-cutting options to boost profits.
• Give line-level buying data in real time for better spend control.

Procure-to-pay software boosts team productivity and purchasing quality. It can also significantly cut waste and cost in your company.