What procure-to-pay challenges is your enterprise currently facing?
Procure-to-pay (P2P) is the procurement process that begins with a requisition and ends with accounts payable. In between these two extremities are several steps procurement teams and vendors fulfill in order to complete the P2P cycle.
As can be imagined there are numerous obstacles that are encountered along this journey especially if teams are still relying on manual P2P systems to procure goods and services.
To drive home this point, we’re going to examine five of the foremost procure-to-pay challenges.
P2P Challenge #1 Slow Approval Times
From purchase requisitions right through to invoices, when the process is manual sign-offs are always bound to be slow.
Every procedure that requires a signature will take longer and this has the very unfortunate effect of slowing down the entire P2P cycle.
What are the consequences of this latency?
· Failure to secure early-bird supplier discounts
· Potential payment penalties and fines
· Gives the wrong impression to vendors
Thankfully, however, this isn’t an obstacle that can’t be solved.
P2P Challenge #2 Numerous Compounding Costly Errors
By default of being processed on paper, manual P2P requisitions, purchase orders, and invoices run the risk of carrying substantial errors.
Errors are inevitable when you’re relying on fallible human beings to transfer data from invoices, purchase orders, and requisition orders.
Lack of accuracy can expose enterprises to compliance threats as well as potentially lead to misuse of funds.
There is no doubt that data entry is a strategic operation and one where errors along the procurement supply chain should be mitigated. Already, enterprises are paying dearly upwards of $600 billion every single year.
P2P Challenge #3 Exorbitant Costs For Each Invoice
Processing invoices manually is a timely and costly affair. In fact, research shows that it costs $30 per invoice on average; and takes three full weeks to process a single paper-based invoice. This is opposed to just 5 days and a $3 cost when you’ve automated the process.
That’s not all, but errors highlighted in the previous point can seriously impede the productivity of the procurement team.
We also cannot talk about paper invoices without discussing how difficult and complex it is to store these physical copies. Whether they are being stored onsite or off, physical invoices are just cumbersome.
And speaking of laborious storage here is the next procure-to-pay challenge.
P2P Challenge #4 Inconvenient Data Retrieval
As if storing physical invoices wasn’t enough, there is also the added hassle of having to retrieve all paperwork associated with a P2P process if there is a need to verify something.
This is often the case during audits or when suppliers query a particular invoice. Manual storing and retrieval prove to be very inefficient at quick data retrievals. There can be only one way out – automation.
P2P Challenge #5 Limited Data Visibility
In the modern world, every organization relies on data and analytics to make business decisions. Data is central if you wish to streamline your operations and mitigate procure-to-pay costs.
Therefore it’s not hard to see why the lack of visibility is among these procure-to-pay challenges. Without a clear view of what’s been received, teams can’t determine what has been processed or sent to accounts payable.
Having visibility not only brings about oversight but can greatly assist in the creation of strategies aimed at improving the entire P2P cycle.
Now that we’ve discussed at great lengths the various procure-to-pay challenges that can exist, here is how you can overcome them.
The Leading Strategy to Overcoming Procure-to-Pay Challenges
There is only one contemporary solution that will overcome each of the five challenges listed above and that’s automation.
Enterprises must adopt AI-driven procurement solutions if they wish to get past the hurdles presented by manual P2P processes.
Integration of P2P procurement solutions means businesses can automate each stage of the procure-to-pay lifecycle as follows:
Services and raw materials can be requested electronically and purchase requisitions generated in a matter of minutes.
Owing to greater visibility provided by the P2P software, requisitions are received, evaluated, and approved faster.
Purchase Order Generation
With requisitions approved, the same requisition can be used as the template to create the purchase order which will be sent to the vendor.
Purchase orders no longer have to be mailed or delivered in person. Through the click of a few buttons, vendors on the other side can receive POs, assess whether they can fulfill them, and deliver faster than before.
Reconciliation and Invoice Processing
With good delivered and accepted, an invoice is generated by the supplier and issued to the accounts payable team for reconciliation.
Overall, automation significantly improves the entire P2P cycle and successfully overcomes the aforementioned procure-to-pay challenges.
Manual procure-to-pay processes have no place in modern procurement operations. In a fast-paced world, a P2P cycle that is encumbered by legacy touchpoints is a great disservice.
From impacting your bottom line to your overall operational integrity, the procure-to-pay challenges that accompany the use of old P2P processes are not worth the trouble when you have the chance to upgrade to sophisticated AI-driven automated solutions.
If you’re looking for reliable, robust, and innovative procure-to-pay solutions look no further than ProcurePort. Our software is trusted and used by enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.
To discuss procurement software with one of our consultants or to schedule a demo of our solutions, contact us today.