Purchase-to-Pay: Explained

The secret to effective, agile, automated P2P


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What is Purchase-to-Pay?

Purchase-to-Pay is made up of a number of stages that describe the end-to-end buying process, from initial request and purchase through to invoicing and payment for good/services received. By simplifying these processes, you can take a big step towards your digital transformation goals.
 
The class of software systems that have come into being in recent years to address this important cycle is generally referred to as Purchase-to-Pay or Procure-to-Pay software systems – P2P systems for short.
 
P2P systems consist of a number essential components:
  • Buying - Requisitioning, approval, ordering and receiving, while preventing unauthorised purchases and maintain control.
  • Hiring - Instant access to who you are hiring as temporary staff, from which supplier, and for what cost.
  • Budget Management - Real-time insight into budgets with clear dashboards and reports for complete budget control.
  • Invoicing - Automated invoice registration, validation, matching and payment approval for PO and non-PO invoices.
With these components integrated into a single P2P software system, the entire process becomes automated, collaborative and streamlined, carries a complete audit trail, and captures purchase history for later spend analysis.

Purchase-to-Pay (P2P) best practice

P2P bridges Finance, Procurement and the wider business and drives value into every corner. When we look at P2P’s impact on each area, it is clear that it is the center piece to your Spend Management strategy:


 

How to achieve an effective, agile and automated P2P process

A good P2P software solution will provide automation - an electronic system that allows employees throughout the company to browse supplier sources such as catalogs and websites online to find, then purchase or request, the item or service they need from an approved supplier.

The purchase request will be compared to corporate rules based on who is making the request, the cost, the spend category, and other criteria. For approval it will electronically route the request to the right manager. POs will automatically be placed for approved requests. When the invoice arrives, it will be electronically matched against what was ordered and received, and against applicable contract terms.




The best P2P systems process the great majority of invoices “straight-through”, while automatically initiating workflow-based resolution of any exceptions. Once authorized, invoices are passed to your Accounts Payable function for payment.

Learn how Wigan Council achieved 66% processing cost savings by centralizing its AP function and automating P2P.
 
Improving your existing P2P processes may seem daunting, but by identifying where saving opportunities lie within your organization and employing a modular approach to automation, you can focus efforts on where you have the most immediate need.

Download this guide for a practical way to get started in the pursuit of P2P process optimization. 
 
Need immediate support?
More than ever, remaining agile to the changing demands on your business is key. We are able to help reduce time spent on invoice processing with our managed or self-serve invoice capture solutions so you can focus on driving your business forward: 

Find out how
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