What is Source-to-Pay?
Often referred to as S2P, source-to-pay is the end-to-end process of sourcing, ordering, and paying for goods and services. It covers every step in the process, from spend management, strategic sourcing, and vendor management, through to purchasing, invoicing and supplier payments.
The model is designed for organisations with complex procurement needs who require a dedicated sourcing function.
Source-to-Pay Applications
Source-to-pay applications utilise technology, big data, and business networks to create process efficiencies, allowing companies to integrate practices, and automate their sourcing and procurement activities.
From increasing visibility throughout the process and strengthening contractual compliance, to improving collaboration and spend analysis, source-to-pay solutions allow companies to streamline processes and cut down their source-to-settle time.
What’s the difference between source-to-pay and procure-to-pay?
Although source-to-pay and procure-to-pay are similar, there are also a number of key differences between the two processes.
The main difference between P2P and S2P is the starting point in the process. P2P typically starts with the requisition of goods and services and ends when the accounts payable team pays the supplier, while the S2P process starts one step earlier, with the sourcing of goods. Also, for P2P most of your suppliers are already selected, so it's less about sourcing suppliers and more about ordering from the approved.
As a result, S2P makes strategic sourcing part of the process, ensuring the best suppliers are selected and negotiating deals with them. This helps to optimise internal controls, enhance supply chain efficiency, and simplify supplier relationship management.
Find out more about the differences between source-to-pay and procure-to-pay here.
Clearing up confusion: Source-to-settle or source-to-pay?
Source-to-settle (S2S) is another term for source-to-pay (S2P). The source-to-settle, or source-to-pay, process brings together sourcing and purchasing. The process includes the following stages:
- Sourcing (including RFx and Auctions)
- Requisition management
- Generation and transmission of purchase orders
- Receipt and processing of invoices
- Payment of invoices
What is the source-to-pay process?
The source-to-pay process starts with finding, negotiating, and contracting suppliers of goods or services and ends in the payment for those goods or services.
A full source-to-pay process map usually includes the following stages:
- A need for a product or service
- Identification of potential suppliers
- Running demos or PoCs with relevant suppliers
- Evaluating suppliers
- Contracting suppliers
- Placing orders
- Monitoring the supply of the products or services
- Authorisation of payment
- Release of payment
The process also includes all the activities that support these stages and the end-to-end operation, including supplier and master data management.
THE SOURCE-TO-PAY LIFECYCLE
The source-to-pay process is a time-consuming one, typically following the lifecycle below:
Finding suppliers - During the first stage of the lifecycle, extensive market research is carried out to identify potential suppliers. This stage typically involves sending out Requests for Information (RFI), Requests for Proposals (RFPs), and Requests for Quotes (RFQs).
Evaluating and vetting suppliers - Once the requested information has been supplied by the potential suppliers, the sourcing team can vet and evaluate them to identify the best partners. They will typically look at factors such as quality, pricing, minimum order quantities, delivery times.
Negotiating and contracting - Once they have identified their chosen vendors, the sourcing team will enter the negotiating and contracting phase.
Delivery and payment - The final stage in the source-to-pay lifecycle is the ordering and delivery of the goods and services, receipt and processing of invoices and the supplier payment.
Source-to-Pay Summary
Source-to-pay is the end-to-end process of sourcing, ordering, and paying for goods and services. It covers every step in the process from spend management, strategic sourcing, and vendor management, through to purchasing, performance management, and accounts payable.
S2P automation offers a whole host of benefits, including cost savings, increased control, improved supplier relations, reduced risk, and more.
At Basware, we offer a range of S2P solutions and support an open S2P ecosystem philosophy which enables co-existence and connection amongst best-of-breed solutions and multiple vendors, backed by our robust integration capabilities and our leading procure-to-pay core. Learn more about Basware’s source-to-pay solutions and how we can support all your automation needs or today, tomorrow, and the future.
Procure-to-Pay Solutions
Automate your procure-to-pay (P2P) process to drive cost savings, boost processing efficiencies, and gain 100% visibility across suppliers and spend.
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Source-to-Pay Solutions
Automate and streamline the entire source-to-pay cycle with Basware, gaining visibility across the entire process including 100% of suppliers & spend.
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Best of Breed Approach
Automate your source-to-pay cycle using multi-vendor specialists to build an ecosystem rather than a single-solution, for fast time to value and ROI.
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