At Valtatech we want to share our expertise on how to drive measurable value from your source to pay and procure to pay processes. In this article, our resident team of Source to Pay experts have complied together a key list of procure to pay best practices to help you identify how well your organisations procure to pay processes are running.
Every business in the world have suppliers that they have to pay as part of the goods or services they deliver to their customers, the procure to pay process, as a back office function, is one that can often get ignored resulting in a clunky, disjointed process that delivers very little value. A procure to pay process based on best practices can provide organisations with incredible value that can benefit every part of the organisation such as:
- Streamlining the procurement process for your business making it easier to buy goods/services from approved suppliers at pre-negotiated rates
- Reducing the invoice processing time ensuring suppliers get paid on time and the wider business does not need to be involved in the payment process
- Complete visibility of your spend providing businesses with greater insights into how, where and when their money is being spent.
- Improved Supplier Relationships driven by accurate data, mutually beneficial supplier relationships and supplier-led innovation.
- Greater negotiating power with contract renewals through accurate, detailed, on-demand spend data across the whole business
With the value that procure to pay best practices can deliver, usually through procure to pay solutions, our experts breakdown what best practice looks like across the procure to pay process.
procure to pay best practices
For ease of reading we have broken down the procure to pay best practices into three main areas:
- Procurement Operations – how you work with suppliers
- Procure to Pay Operations – how you buy and pay for goods and services
- Data Driven Insights – how you utilise spend, accounts payable and supplier data to improve your business and operational efficiency.
Businesses following best practice in their procurement activities have the following traits:
- They actively use data to drive greater relationships with suppliers
- Sourcing is conducted via a single, unified platform across the whole business
- They have a centralised procurement team that has complete visibility over all spend with suppliers
- They have clear policies and guidelines to define strategic versus tactical sourcing
Procure to Pay Operations
Businesses following best practice in their procure to pay operational activities have the following traits:
- They have a unified and single platform to manage all corporate spend
- More than 95% of their spend is pre-approved (e.g. approved before the invoice arrives)
- More than 95% of invoices are received from suppliers in a way to drive invoice automation (e.g. supplier direct connection, Peppol, supplier portal)
- Invoice approvals are managed in a digital platform (email is not considered a digital platform)
- New suppliers are always created before the first invoice arrives
Data Driven Insights
Businesses following best practice in their how they use procure to pay data to drive business insights have the following traits:
- They are able to run on-demand reports detailing purchase order versus non-purchase order spend
- They are able to run real-time reports on different spend categories (e.g. marketing, IT, operations etc) pre and post payment
- They are able to run on-demand spend analysis reports to negotiate better deals with suppliers
- They have and track KPIs for invoice approvals
- They have and track KPIs for purchase order approvals
- They have complete, on-demand visibility over their committed spend/outgoing liabilities
- They are able to benchmark their procure to pay processes against industry standards and best practice on demand.