What is Procure-to-Pay?
The Procure-to-Pay (P2P) process is that part of the procurement cycle excluding the sourcing process. The procure-to-pay process is also referred to as the purchase-to-pay process. The procure-to-pay process flow integrates purchasing and accounts payable systems for greater efficiencies. procure-to-pay solutions are part of the larger procurement management process. Procure-to-pay or p2p solutions help organizations inquire, request, receive, and then pay for goods and services. The procure-to-pay cycle involves all the activities required to complete an order.
The main intent of a P2P procurement process is to track the purchasing behavior of the organizations and how they pay for the costs incurred. Policies and procedures that govern purchases and spending patterns are included in the P2P system.
The outline of the procure-to-pay cycle is given below:
a purchase requisition is submitted to procure goods or services for the organization. The department that requires goods or services raises a purchase requisition containing details on the type and quantity of goods needed.
the vendor is chosen based on the type of goods or services required by the organization. Once the purchase requisition is formally approved, the procurement team hunts for the right vendor to fulfill the requisition based on criteria like delivery timelines, credit period, service quality, etc.
once the vendor is chosen, the procurement team releases a purchase order containing details on the description of goods/services, department account number, signatures of the designated authority, the quotation from the chosen vendor, and delivery instructions.
Receipt of goods:
while delivering the goods, vendors specify the GRN containing details such as delivery timelines and product details. Once the goods/services are received by the buyer their correctness and quality are validated.
3-way matching of the details such as goods and receipt number, purchase order, and tax invoice received is then performed by the procurement team to ensure that billing is done for the goods purchased.
upon successful 3-way matching, payment to the vendor is initiated. Payment may be done through digital channels or by issuing a cheque or demand draft in the name of the vendor.
once the payment is completed, data at every stage of the procure-to-pay cycle is documented by the procure-to-pay software.
Every retailer, service provider, or manufacturer requires an efficient way to manage to purchase, and maximize buying power, vendor relationships, and cash flow. The best way to achieve all of these is to optimize the purchase-to-pay process. A streamlined procure-to-pay system helps create a well-defined procurement plan containing detailed identification and pricing information of the goods and services required by the organization.
Since the procure-to-pay process involves purchase, accounts, and reconciliation departments, it impacts business performance significantly. While a well-planned purchase-to-pay process ensures high business productivity and efficiency, it can backfire when not managed well. Mismanaged vendor relationships, miscommunication, and contract mismanagement are some of the issues that arise due to inefficiencies in the P2P system.
Benefits of Digital P2P Solutions
The definition of procuring to pay is the process of obtaining the materials that are required to make a product and making payment for the purchase. Purchase 2 pay is the basis of a strong procurement strategy. P2P solutions offer several advantages to businesses.
The key advantages of P2P software include:
A digital P2P system empowers the procurement team with complete control over purchase-related activities via a centralized application. Cloud-based procure-to-pay software enables teams to formalize contract rates, make payments, evaluate vendors, and process invoices from anywhere through the web or mobile apps.
Adherence to Government regulations and policies:
Digital procure-to-pay solutions standardize the approval process, thereby, increasing transparency and accountability of the procurement cycle. The automated P2P platform allows multiple-level customization of the approval-flow-based process.
Improved spend visibility:
Automated P2P solutions provide real-time analytics, which helps the finance team to gain visibility over organizational spending. These insights help them streamline the spending process and eliminate unnecessary expenses.
P2P software enables the procurement team to schedule automated reminders that notify stakeholders about approvals and payments. These reminders ensure that payments to vendors are made on time.
Procure-to-pay software brings the procurement and finance team together for a seamless collaboration of operations. The automated system enables vendor notifications, alerts, and reminders for approvals and payments. Clarifications on payment statuses are made available through an integrated chat system.
Best Procure to Pay Software
Procure to pay software manages all the procurement activities. Procure-to-pay applications help companies streamline their procurement operations and improve efficiencies through centralized access to procurement data. The accountants use the p2p software to monitor invoices and payments. Suppliers can also use procure-to-pay software for online portals.
The G2 scores are gathered from user community reviews from online and social networks. A list of top purchase-to-pay software in the market based on the G2 score is given below.
Evaluation of the software is based on the following features:
- Consolidated procurement information from disparate sources
- Define and manage procurement business processes
- Manage all procurement operations
- Monitor all procurement-related finance transactions
- Define and implement purchasing policies and best practices
The top procure-to-pay software in the market are listed below:
- SAP procure to pay – SAP Ariba
- Oracle procurement cloud
- Coupa procurement
- Buyer Quest
- MHC Software