We take a closer look at procure-to-pay: definition and P2P solutions, you'll know everything!

Is P2P, or procure-to-pay, becoming a major new challenge for businesses? 🤔

Procure-to-pay refers to a company's purchasing process, from requisition to payment. In an increasingly competitive market, companies need to take the path of operational efficiency, and the P2P cycle is no exception.

In order to grasp all the challenges surrounding procure-to-pay, let's take a look at its definition, its advantages and the procure-to-pay solutions to adopt today!

See all software Vendor Management System (VMS)

Procure-to-pay: definition

Procure-to-pay, also known as purchase-to-pay, refers to a company's flow of activity from :

• purchase requisition from suppliers ;
• then procurement;
• to payment of the associated invoice.

This is why the notion of the " supplier cycle ", upstream of the " customer cycle " (or order to cash), is associated with procure-to-pay.

However, the definition of procure-to-pay goes further than that of a simple succession of activities. It also encompasses :

• the idea of streamlining processes to boost productivity ;
• the digitization of processes, through the use of tools.

☝️ It's important to differentiate procure-to-pay from another process which is very similar to it: source-to-pay (S2P), involving the active and strategic sourcing of products and services.

The stages of the procure-to-pay cycle

The procure-to-pay process is made up of several stages, from product sourcing to supplier account updating and procurement.

Here are the 4 main ones:

• Purchase requisition :
  • product search ;
  • basket creation ;
  • requisition creation;
  • requisition processing and authorization, etc. ;
• Procurement :
  • creation of purchase order;
  • follow-up and receipt of goods ;
  • evaluation of order conformity, etc. ;
• Supplier invoice management:
  • invoice reception and sorting ;
  • validation workflow ;
  • invoice reconciliation and processing, etc. ;
• Payment:
  • payment settlement ;
  • supplier account update, etc.

👉 Detailed diagram of all purchase-to-pay stages:

What about using a procure-to-pay solution?

As we mentioned earlier, the notion of P2P often implies the use of a procure-to-pay tool.

Its primary objective is to streamline the entire end-to-end process, sometimes right from supplier sourcing. Data centralization, automation (reconciliation between purchase orders and invoices, approval workflows, etc.)... everything is designed to save organizations precious time.

Of course, these platforms also support the dematerialization of documents. For example, they enable supplier invoices to be sent electronically.

We generally distinguish several types of tools capable of supporting procure-to-pay, or at least part of it. These include

• ERP: complete business software, sometimes including native functionalities that support part of P2P activities, such as electronic invoicing. In addition, some ERPs offer modules fully adapted to supplier cycle management.
  
  
• Complete procure-to-pay solutions: depending on their needs and software environment, some companies prefer to use this type of tool, entirely geared to streamlining P2P.
  
  
• Dematerialization and electronic document management (EDM) software: these tools help automate the processing and archiving of documents linked to the P2P cycle. Some integrate advanced functionalities, such as automatic invoice recognition (OCR).

💡 Examples of procure-to-pay solutions:

• Esker, an easy-to-use procure-to-pay solution that automates and dematerializes purchasing and supplier invoice management. It is based on intelligent document recognition, and complies with regulations in force in various countries.
  
  
• Compleo Invoice Platform, cross-functional, scalable supplier invoice dematerialization software. Compatible with your ERP and accounting tools, it accelerates the P2P cycle thanks to its AI technology, automated 3-way-matching and customized validation workflows.
  
  
• Flowie, a modern platform that reconciles purchasing and finance teams around intuitive, automated and precise P2P management. Based on AI and focusing on the ESG impact of processes, it can be deployed in a matter of moments thanks to over 400 native integrations.
  
  
• Itesoft, a supplier invoice dematerialization tool offering purchase requisition, supplier portal and Supplier Relationship Management functionalities, to cover the entire procure-to-pay cycle.
  
  
• Nexia, a cross-functional EDM that digitizes all business processes, including financial processes (supplier invoices, customer invoices, purchase orders, etc.), and enables rapid document retrieval thanks to a predictive search engine.
  
  
• Quadient Accounts Payable, an innovative solution. With its high degree of automation, automatic data recognition and traceability functions, you'll save money on your invoicing management and comply with various legal obligations.
  
  
• SY by Cegedim, a platform for dematerializing documents and digitizing your procure-to-pay process. Simplify all stages of your supplier cycle, from managing your purchases to automating your business rules and processing your supplier invoices.
  
  
• Yooz, software with a comprehensive functional scope. Thanks to its artificial intelligence and its connection to over 250 ERP and accounting applications, you can drastically reduce your invoice processing costs and payment times.

5 benefits of P2P process automation via a software solution

1- Process acceleration

Manual processing of the various stages in the supplier cycle, particularly paper invoices, is particularly time-consuming.

Thanks to workflow optimization, teams are freed up from certain tasks, and have more time to work on higher value-added missions.

For example, purchasing managers gain more bandwidth to devote to strategic supplier sourcing activities.

2 - Reduced risk of errors

Manual purchasing processing also generates a higher risk of errors:

• typos in data entry ;

• duplication ;

• confusion when reconciling documents, etc.

Automating P2P processes naturally reduces these risks of human error, and the associated disputes.

3 - Cost reduction

Increased team productivity generates profitability for the company. In addition, thanks to the reduction in error-related modifications, the cost per invoice is lower.

It's also worth noting that speeding up operations can generate additional profits, thanks to early payment discounts offered by certain suppliers.

Thanks to the practice of discounting, companies save an average of 1% on each order, for an annual return of 18%. This is far higher than any interest earned on a bank investment.

Source : Itesoft

4 - Improved supplier relations

Fewer errors, shorter payment times, better communication... procure-to-pay enables you to maintain privileged, trust-based relationships with suppliers.

The result is truly lasting and beneficial partnerships.

5 - Increased visibility

The automation of P2P processes provides greater traceability of corporate spending. By tracking physical and informational flows, and thus analyzing performance in real time, decision-making becomes more strategic.

As a result, costs and resources are further optimized.

See all software Vendor Management System (VMS)

What are the benefits of procure-to-pay?

It goes without saying that the benefits of an optimized procure-to-pay process are numerous, as they respond to two major growth challenges for companies: improving productivity and reducing costs.

However, this transition towards digitalization of the supplier cycle, even when supported by the use of appropriate purchase-to-pay software, cannot take place without optimal collaboration (across all departments within the company, but also with your suppliers) and support for change.