What is procure-to-pay, and why is it important?

An introduction to P2P. What is procure-to-pay, and why is it important?

 

If you’ve had anything to do with supplier invoicing over the years, you’ll be familiar with the masses of associated paperwork that can float around an organisation – or get lost in someone’s in-tray. There are quotes to compare to invoices, invoices to match to order numbers, recurring and one-off invoices to review, code, and approve. There’s the effort to collect signatures from all concerned before the invoice is marked for payment, and the time to manage calls from suppliers wanting to know when their invoice is going to be paid. Then there’s the search for mislaid or queried invoices. Plus the effort required to prepare EOM cashflow reports.

Yes, it’s a month-round lolly scramble. Not only is using paper an incredibly slow way to manage the whole process, but it leaves you open to fraud, and keeps your account payable team bogged down with manual procedures. And it’s a problem that only gets worse as you get bigger and busier.
So, it’s thank goodness for procure-to-pay!

 

How does P2P work?

In a nutshell, P2P integrates your procurement and accounts payable departments. While there may be variations, a procure-to-pay system basically allows you to:

1. Raise a purchase order (and provide pricing and codes from a product and service ‘catalogue’, or to reflect a supplier’s quote).

2. Send an electronic purchase order to the supplier or vendor.

3. Receive an invoice, and if it matches the purchase order precisely and meets all parameters, it’s coded and automatically approved and sent to your finance system or ERP for payment. And if it doesn’t match the purchase order? The P2P system enters the invoice into a handsfree workflow for review (and delivers electronic nudges, so it doesn’t get missed or forgotten!).

 

How will your business benefit from implementing a P2P software solution?

To start with, you will get a big thumbs up from a keyboard weary accounts payables department. They’ll be freed up from the time-consuming and tedious manual tasks traditionally associated with matching purchase orders to invoices. With a P2P system, just one person can usually handle large volumes of incoming invoices single-handled. Employee stress is relieved, and they can apply their skills to more high-value financial tasks.

Your suppliers will be happier. By using automated workflows, and intelligent checks and controls, supplier invoices are processed more quickly, and payment schedules are transparent. When a supplier rings, it’s a matter of seconds to find out where their invoice is and when it’s due to be paid.

And your financial controller will most definitely be happier! Not only is the potential for fraud reduced significantly, and accuracy improved, but the invoice approval and purchase order management process is reduced from days to minutes. It’s easier to track, reconcile, report on, and manage organisational spending.

In summary, it’s three cheers for the bright spark who conceived the procure-to-pay process! We don’t know who you are, but we’d buy you a coffee anytime!