Purchase-to-Pay glossary
Contracting:
Contract management includes negotiating the terms and conditions to be used in contracts and ensuring compliance with these terms and conditions, as well as documenting and agreeing on any changes that may arise during the contract’s its implementation or execution.
Invoice coding:
Every invoice must be accounted for. In practice, this means assigning the costs to a cost center or to one or more accounts, separating tax from net values, and so on. Invoice coding can be done manually but can also be part of the automatic matching process.
Invoice processing:
The process of receiving and entering an invoice into the system. This can happen by paper mail and manual data entry, semi-automatically through a scan-and-capture process using OCR to extract the relevant data for electronic processing, or through a fully automated process where the incoming invoice is delivered as an e-invoice data file that is fully compatible with an electronic workflow.
Invoice review/approval:
Every invoice requires final approval before it can be paid, often by more than one person.
Payment:
The final step in a purchase-to-pay process. Once the invoice has been approved, instructions are automatically sent to the finance system to pay the invoice according to the terms of payment.
Procurement:
Raising and issuing of an approved purchase order (PO), specifying the items or services ordered, the quantity, and the agreed pricing or other terms of purchase. When the goods or services have been delivered and an invoice received for them, the invoice will need to be matched with the coding details and approval information from the PO before payment can be approved. Automating this matching process represents one of the main efficiency gains of purchase-to-pay solutions.
Receiving:
The receipt of goods or services into the buyer’s purchasing system. The individual who receives the goods accesses the system and marks the item as received. The receipt of goods in the purchasing system is a necessary step for enabling automated three-way matching between purchase order, receipt, and invoice.
Sourcing:
Identifying the supplier for a given good or service and securing the terms of purchase. Whether a one-off or part of an ongoing procurement arrangement, sourcing may involve the exchange of large quantities of product and pricing information, and involve multiple stages of supplier evaluation and negotiation – a process greatly facilitated by electronic systems.
Spend analysis:
A critical part of the purchase-to-pay process, spend analysis is an in-depth analysis of an organization's expenditure data. It includes what you spend, with whom you spend it, and through which channels you spend. Accurate spend analysis helps set the baseline against which sourcing programs can be measured as well as helping with the identification and prioritization of sourcing opportunities.