Procure-to-Pay Process

Different departments within an organisation typically have their own processes, which can make consolidating data a challenge. Procurement and accounts payable functions are managed by two distinct departments, governed by differing policies, systems and priorities. This lack of uniformity can lead to inefficiencies and potential errors.

Procurement departments are responsible for negotiating pricing and discounts with suppliers, whereas the accounts payable operation is responsible for complying with these negotiated contracts. In a paper-based environment, without technology that spans both processes, policy non-compliance can lead to significant, unnecessary costs.

Organisations that use disparate systems often find they lack access to information across the P2P cycle, and even in the cases when information is available it might be inaccurate. This leads to a lack of visibility across suppliers and spend and impacts the ability to make strategic business decisions.

Following the best practices below will allow you to improve efficiency and effectiveness:

• Implement an automated procure-to pay-solution

• Ensure the P2P process is transparent and traceable at all times

• Increase collaboration between procurement and AP

• Optimise supplier engagement and satisfaction

• Develop measurable goals and track performance

Although every business is different, the core KPIs used to review the procure-to-pay process largely remain the same:

• Purchase order cycle time

• Average cost to process a purchase order

• Lead time

• Electronic PO processing rate

• Invoice processing time

• Average cost to process an invoice

• Invoice exception rate

• First-time match rate

• Average invoice approval time

• Days payable outstanding

• Spend under management

• Realised savings

• Discounts captured

P2P automation drives cost savings and processing efficiencies by eliminating time-consuming and error-prone manual processes from procure-to-pay operations. When you fully automate your procurement and payables processes, you can capture 100% of your financial data, and achieve the highest levels of visibility across the supply chain.

Through automation, you can connect with your suppliers in an electronic and streamlined manner. Leveraging a range of methods to engage with suppliers and exchange data and documents, you can connect to all of your suppliers – from the largest to the smallest. P2P automation also increases on-time payment performance and provides suppliers with real-time visibility into transaction status, improving supplier relations and collaboration.

The way to ensure compliance with purchasing policies and negotiated contracts is to provide an electronic procurement (e-procurement) solution that enables end-users to quickly find and order exactly what they need. A solution that offers an easy-to-use interface, supported by a robust underlying data model, and guided purchasing will ensure 100% user adoption, enabling users to stay compliant with procurement policy and eliminating maverick spending.

Cost containment and spend control are becoming strategic priorities for CFOs and CPOs, while at the same time minimising disruptions to operations. P2P automation solutions provide a holistic view into your suppliers and spend from a single, centralised location to enable better strategic decision-making. Armed with data and visibility into company spending, you will be in a better position to control spend, mitigate risk, and manage the entire supply chain.

To find out more about how Basware can help you optimise your procure-to-pay process, contact us today.