Are you curious about the procure-to-pay process?
Yes? You’re not alone.
There’s a lot to know about the procure-to-pay process.
In this post, we’re going to address questions like what is the procure-to-pay process definition? What are some of the leading P2P solutions and best practices you can adopt within your own organization?
If you’re looking for strategic ways to improve your procure-to-pay operations this year, look no further.
What is the Procure-to-Pay Process Definition?
In order to get a comprehensive, procure-to-pay process definition, we turn to the procurement glossary kindly availed to us by the Chartered Institute of Procurement & Supply (CIPS).
They aptly define the procure-to-pay (P2P) process as:
“…the process of requisitioning, purchasing, receiving, paying for, and accounting for goods and service.”
In summation, the procure-to-pay process, which is synonymous with purchase-to-pay, is that process that begins when a requisition order is placed for raw materials or services and concludes with settling the invoice by the accounts payable department.
Broken down to its core elements, we see that the P2P process has eight main characteristics points:
· Identifying products and services needing procurement
· Issuance of a formal requisition order
· Requisition order approval or rejection.
· Purchase order generation using requisition order as a template.
· Purchase order submission to vendor.
· Purchase order fulfillment by supplier and goods receipt.
· Invoice reconciliation and three-way matching
· Accounts payable releases payment to a vendor
Now, if you’re looking to benefit from your procure-to-pay strategy, the use of advanced P2P technology is a must. Automation of the purchase-to-pay process has shown that it leads to cost savings, reduction of invoice fraud while increasing visibility and profitability.
Simplify Your Procurement Process
When it comes to a company that provides procurement solutions that are easy-to-adopt and can be integrated at a company-wide level with less stress, you won’t go wrong with ProcurePort.
From their purchase requisition software, to reverse auction technology and even the RFx solutions, there is an entire suite to accompany you along the P2P life cycle.
Procure-to-Pay Best Practices
Relying on our rich experience as procurement specialists working with businesses in disparate industries, these are some of the P2P best practices we advocate.
Best Practice #1 Automation Provides Value to the Organization
It’s generally not hard to figure out what most companies are out to achieve. It can be surmised as follows: cut costs and improve the bottom line.
Now, one area in which these targets can be realized is along the P2P life cycle via automation.
At every step, there is an opportunity to reduce spending. And all of this has been made easier thanks to P2P solutions such as those provided by ProcurePort.
Best Practice #2 Make Supplier Relationships a Top Priority
Management consultant, W. Edwards Deming had it right when he said, “You must have a supplier relationship of constant improvement.”
If you take good care of your vendors, they’ll reciprocate the courtesy and ensure you get their best services. It’s an ideal win-win situation.
Developing trust in any relationship takes time. And with your vendors, it’s even more important as confidence and mutual respect form the foundation of your future interactions.
Begin your campaign to improve your supplier management relationship by engaging with your vendors like the strategic partners they are, and not some disposable asset.
Follow up with clear communication, sharing, and discussion of the key performance indicators to ensure you’re both on the same page.
Best Practice #3 Work to Increase Transparency and Visibility
There are numerous touchpoints along the P2P cycle, with several people involved. Transparency and visibility are therefore very important aspects of the procure-to-pay process.
If you want to get the most out of your P2P efforts, it’s imperative that you have a clear idea of who’s in charge of what, where everyone is in terms of completing their tasks, what is pending, and where the bottlenecks are.
Transparency and visibility encourage strategic spend management, facilitate bulk purchasing, lead to improved performance and cost reductions.
The Bottom Line
We’ve understood the procure-to-pay process definition and seen how a well-managed procure-to-pay process can improve operational efficiency. We’ve also discussed how such a process coupled with a robust P2P solution that provides better requisition capability, invoice processing, and payment will help distinguish you from other enterprises.
Our procurement software is trusted and used by enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.
To learn more about our P2P solutions or to watch demos contact us today.