Learn how procure-to-pay software can drive efficiency and cost savings. Our guide provides insights into its benefits and the value it brings to...
Digital procure-to-pay (P2P) processes offer several advantages to businesses that implement them, from time savings and cost reductions to increased transparency and improved vendor relationships. In this article, we’ll explore the key benefits of the procure-to-pay process and why companies should consider digitizing their P2P process.
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What is the procure-to-pay process?
The procure-to-pay process, also referred to as P2P or purchase-to-pay is the process of acquiring goods and services in an organization, usually starting with an employee's requisition for goods or services, purchasing, receiving, accounting for and ultimately, paying for those goods or services.
The procure-to-pay process defines the sequence of actions that take place in the cycle, spanning vendor selection, internal controls, verification, and accounts payable functions. This business-critical procedure is familiar to every company, regardless of its size, while the manner in which these touchpoints are carried out may differ in functionality and efficiency.
What is the importance of a digital procure-to-pay process?
It’s important that businesses define and implement a procure-to-pay process as early as possible, as an efficient cycle can save valuable time, money, and effort. Despite the prevalence of modern procure-to-pay systems, many businesses are still relying on outdated or stop-gap solutions that combine paper or email-based processes, multiple spreadsheet tracking, and costly retroactive procedures. Not only are these companies taking longer to process payments and incurring penalties for late fees, but they are also missing out on consolidation opportunities, volume discounts and data insights that improve decision-making to minimize operational costs.
Without a defined procure-to-pay process, your business may encounter operational inefficiencies, spend leakage, and exposure to financial risks. Manual processes and delays, human error, and a lack of real-time insights can all contribute to unmanaged spending and financial losses that directly impact your bottom line.
So, let's explore the key benefits of the procure-to-pay process and the imminent risks of not having a digital system. We’ll also cover how you can leverage your procure-to-pay process to achieve long-term savings and success.
Benefits of a procure-to-pay process
Companies leveraging digital cloud solutions have a distinct advantage over those that choose to continue operating using legacy technology or manual processes. To be competitive in today’s fast-moving business landscape, modern companies need system accessibility, speed, visibility, and simplicity to operate effectively. Empowering teams to be effective, with systems that enhance productivity and ensure accountability, enables business leaders to maintain financial control, while their teams thrive.
Here’s an overview of the key benefits of the procure-to-pay process using a cloud-based system, and how the features combined drive best practices, process and cost efficiency.
By replacing manual processes with automated workflows, the procure-to-pay process becomes more efficient, simplifies procurement processes, and notifies users when actions are required.
Cloud-enabled access via smart devices allows for procurement processes to be accessible from any location, improving the accessibility of the procurement process.
Automation simplifies the procurement process and reduces purchasing cycles, resulting in quicker turnaround times and time savings.
With easy, automated processes, the procurement process becomes less complex, encouraging process adoption and improving overall efficiency.
A digital procure-to-pay process provides complete oversight of procurement processes and spending, allowing for better spend management and strategic planning.
Business intelligence (BI)
The tools provided by the automated procure-to-pay process allow for the analysis and reporting of budgets and expenditures, enabling businesses to understand spending trends and identify areas for cost reduction.
By configuring rules and policies for your procure-to-pay process, you can drive compliance with internal controls that mitigate risks.
Automation helps to mitigate the risk of overspending, unauthorized expenditures, and payment errors, enabling businesses to manage their spending more effectively.
Transparency and auditability
Detailed audit trails that track each step in the procure-to-pay process improve transparency and auditability.
A digital procure-to-pay process empowers users to spend responsibly and make informed and accountable spending decisions, improving overall accountability.
In addition to these benefits of the procure-to-pay process, businesses can further leverage automation to improve team dynamics and establish new and effective ways to achieve business objectives, enhancing the overall effectiveness of the procurement process.
Improve team collaboration
One fundamental component that companies often overlook when defining their procure-to-pay process is effective team collaboration.
Generally, most organizations will have a user looking to purchase an item, often referred to as a requestor. The second person involved might manage supplier onboarding and quoting processes. Once a supplier is approved and any required quoting steps are completed, a requisition needs to be submitted to the next employee in the cycle, usually a manager. The manager needs to verify any relevant supporting documentation and ensure there is a sufficient budget for the purchase. Depending on the value, this request might require another level of approval from a manager with more authority. Once approval steps are completed, an employee will need to initiate the purchase order (PO) process. Next, an accounts payable staff member will be responsible for receiving goods, completing 3-way matching, approving the invoice, and posting to the financial system for payment.
As you can see, this process involves many employees, departments, touchpoints, process loops, and compliance checkpoints. By automating these procure-to-pay process steps, each employee is notified when action is required and the request is routed without any human intervention, streamlining the process and mitigating risk along the way.
Whether your team is based in one office, across dispersed locations, or operating remotely, this collaboration is seamless and simplified. Digital purchasing records eliminate manual process frustrations such as unauthorized purchases or lost documentation that can erode working relationships and lead to errors and inaccuracies.
Promote a responsible spending culture
Digital procure-to-pay processes empower each user to be responsible for what they buy and spend.
An automated P2P system empowers teams with:
● Easy and accessible ways to request goods or services, wherever they are.
● Document upload capabilities to support and verify requests.
● A clearly defined procurement policy compliance framework to operate within.
● Budget impact visibility at decision points for authorized managers to make informed decisions when approving spend.
With empowerment comes accountability; this holistic and transparent approach to managing business spend creates a cost-conscious spending culture and promotes responsible spending behavior.
By connecting people, processes, and policies you can drive your spend management strategy forward without micromanaging or restricting your team’s productivity.
How can Fraxion’s procure-to-pay software bring efficiency and savings to your company?
Cloud-based systems like Fraxion are gaining traction as organizations learn more about the efficiency, cost-saving, and profitability enhancing benefits of the procure-to-pay process.
With rising costs, tighter budgets, and the need to do more with less in today’s economic uncertainty, having budget visibility and spend control measures in place is paramount. By automating the procure-to-pay process you not only streamline the purchasing cycle but gain complete spend oversight, risk mitigating internal controls, and effective cost containment. Fraxion's procure-to-pay software offers multiple features that drive these procurement optimizations, business intelligence, and spend management objectives:
- Requisition-to-purchase order and approval workflows
- Real-time budget tracking
- Internal controls
- Expense and travel management
- Vendor catalogs
- AP workflow management
- Embedded analytics and reporting
- Seamless financial system integrations
- Mobile app
We’d love to know more about your current procure-to-pay process, your business goals, and requirements. We take a consultative approach to understanding and solving unique business needs. Request a custom demo today to see Fraxion’s procure-to-pay process in action.