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 purchase request to payment. In an increasingly competitive market, companies need to take the path of operational efficiency, and the P2P cycle is no exception.

To grasp all the challenges surrounding procure-to-pay, let's take a look at its definition, its benefits 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 activity flow extending from :

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

This is why the notion of " 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 improve productivity ;
• the digitisation of processes through the use of tools.

☝️ It should be noted that procure-to-pay should be distinguished from another process which is very similar: 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:

• The purchase requisition :
  • product search ;
  • Create a basket;
  • creation of the purchase requisition;
  • processing and authorising the requisition, etc. ;
• Procurement :
  • creation of purchase orders or purchase orders ;
  • monitoring and receipt of goods ;
  • assessing conformity with the order, 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 involves the use of a procure-to-pay tool.

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

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

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

• ERP: complete business software, which sometimes natively includes functionalities that support part of the 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, which is entirely geared towards streamlining P2P.
  
  
• Dematerialisation and electronic document management (EDM) software: these tools help to automate the processing and archiving of documents linked to the P2P cycle. Some incorporate advanced features, such as automatic invoice recognition (OCR).

💡 Examples of procure-to-pay solutions:

• Esker, an easy-to-use procure-to-pay solution that automates and dematerialises the management of purchases and supplier invoices. It is based on intelligent document recognition, and complies with the regulations in force in various countries.
  
  
• Compleo Invoice Platform, cross-functional, scalable supplier invoice dematerialisation software. Compatible with your ERP and accounting tools, it speeds up the P2P cycle thanks to its AI technology, automated 3-way matching and customised validation workflows.
  
  
• Flowie, a modern platform that reconciles purchasing and finance teams around intuitive, automated and accurate 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 dematerialisation 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 digitises all business processes, including the financial process (supplier invoices, customer invoices, purchase orders, etc.), and enables documents to be found quickly thanks to the predictive search engine.
  
  
• Quadient Accounts Payable, an innovative solution. With its high degree of automation, automatic data recognition and traceability functions, you save money on managing your invoicing and comply with the various legal obligations.
  
  
• SY by Cegedim, a platform for dematerialising documents and digitising your procure-to-pay process. Simplify every stage of your supplier cycle, from managing your purchases to automating your management rules and processing your supplier invoices.
  
  
• Yooz, software with a very 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 your 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.

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

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

2 - Reducing the risk of errors

Manual processing of purchasing also generates a greater risk of error:

• typos when entering data

• duplication ;

• confusion when reconciling documents, etc.

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

3 - Reducing costs

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

It should also be noted that speeding up operations can generate additional profits thanks to the early payment discounts offered by certain suppliers.

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

Source : Itesoft

4 - Improved relations with suppliers

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

This means you can develop truly lasting and beneficial partnerships.

5 - Increased visibility

The automation of P2P processes provides better traceability of company expenditure. By tracking physical and informational flows, and therefore analysing performance in real time, decision-making becomes more strategic.

As a result, costs and resources are optimised even further.

See all software Vendor Management System (VMS)

What can we learn from procure-to-pay?

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

But this transition to a digital supplier cycle, even when supported by the use of appropriate purchase-to-pay software, will not be possible without optimum collaboration (across all the company's departments, but also with your suppliers) and support for change.