What is the importance of Procure to Pay (P2P) solutions for businesses?
- Posted by: David Watters
- Category: Best Practices
In this article, we take a deep drive into why you should consider investing in a Procure to Pay Solution for your business. Firsty, we need to understand what Procure to Pay is.
Running an efficient and resilient business requires an efficient and systemised procurement and accounts payable process. It is important for business leaders to understand how procurement and accounts payable in their business works. From the time an order is placed until payment for that product or service, your team should have complete visibility across this process. In this article, we are going to discuss the complete procure-to-pay process – what it is and the benefits of optimising your P2P process.
What is Procure-to-Pay?
At the most literal level, this is a process by which people make requests for goods and services and then pay their suppliers. The term ‘procure to pay’ actually refers to the full end to end process of buying goods and services (procure) all the way through to paying the invoice for those goods or services (pay). Procure to pay solutions refer to automated systems that effectively integrate procurement processes with accounts payable processes in order to drive data accuracy, process efficiencies, provide complete spend visibility and ultimately drive down corporate spend and the cost of doing business.
Benefits of P2P
Manual work in your procurement and accounts payable processes are far too common and can be a real problem for businesses. The work is typically high volume, transactional in nature and keeps your resources from focussing on more strategic, higher value work. Effectively combining e-procurement and e-invoicing through a right-sized P2P solution allows you to free up your finance and procurement teams to focus on more valuable work, improve spend under management, drive compliance and spend visibility.
Operational Benefits of e-procurement and e-invoicing:
- Fewer errors in transactions due to automation
- Greater compliance to financial policies and procedures
- Faster approvals with automated workflow process steps
Key advantages of P2P Solutions –
1. Streamlining procurement processes for your business
P2P solutions provide an easy electronic system that allows requisitions to be created and approved faster, selecting the most appropriate suppliers based on business rules you decide and purchase orders (POs) can be sent directly to those suppliers. Completely paperless, all adhering to your procurement policies and procedures.
2. Reducing the invoice processing time
Modern P2P solutions provide a number of ways to drastically reduce invoice processing times, from automating the data entry of invoices, removing paper from the whole process and matching invoices to purchase orders – they are excellent ways to to reduce time and costs spent on low value, high volume activities. This can free up your team to focus more on strategic, value adding activities.
3. Complete Visibility
A P2P solution gives complete visibility to the whole P2P process, from detailed spend reporting and analytics, to spend liability reporting to giving your team and your suppliers the ability to view invoice statuses in real-time. This visibility enables businesses to make data-driven decisions across the supply chain with ease.
4. Improved Supplier Relationships
Supplier relationships are easily tarnished by late payments and lost invoices, utilising the range of features in a P2P solution, like a supplier portal, suppliers can get full visibility around when they will receive their payment and the status of their invoice. This provides much greater confidence for suppliers through a reliable and easy to use self-service solution.
5. Leveraging the negotiating power
Spend visibility enables businesses to make better informed, more leveraged buying decisions with their suppliers. Procure to Pay solutions provide full visibility across all corporate spend providing the business with opportunities to consolidate their suppliers, negotiate better deals based on total spend and reduce maverick off-contract spend.
6. Better Decision making
Real-time and historical data provided by a robust P2P solution allows companies to gain greater control over their cash flow. With complete spend visibility, businesses are able to greatly improve their working capital management, allowing businesses to run more efficiently without the risk of volatility in spending or revenue generation.
Procure to pay processes are essential in every single business and there are huge benefits that can be achieved by automating and optimising this process through right sized procure to pay solutions. So, if you are considering investing in a Procure-to-pay system but are unsure of the benefits, hopefully this article will help clear some of the fog around procure to pay solutions. Want to speak to an expert about this? Book a free consultation with one of our experts at Valtatech today!