What is the Procure to Pay process?
Procure to Pay is a process that overlaps with purchasing management within a company. This cycle begins with the placing of the order and ends with the follow-up of the supplier’s payment.
Definition
Procure to Pay covers all stages of a company’s purchasing process :
- Preparing the purchase requisition
- Internal validation process
- Sending the purchase order to the supplier
- Product delivery tracking
- The supplier’s payment request
Digitization via a Procure to Pay software like My Intranet HRIS enables dematerialization of the entire process and thus optimizes flows. Each company is free to customize this process according to the level of internal control it wishes to implement, or the stages that are actually digitized.
The benefits of automation with Procure to Pay
Cost reduction
Dematerialization makes it possible to centralize purchasing management. In this way, operating rules are harmonized. The result is reduced expenditure.
Visibility on expenses
All company expenses are accessible in just a few clicks, with a breakdown by supplier and by period.
Time saving
The time spent on purchasing management is greatly reduced thanks to digitalization. Computerized access to data facilitates information retrieval and order tracking.
Expense control
Each purchase requisition and payment request pass through a validation flow (workflow) comprising one or more people to check the compliance of each commitment.
Centralization of subcontractor data
All information is consolidated in a database of the company’s suppliers accessible by all employees. This ensures data consistency.
Error reduction
The process is designed to offer a number of levers to limit the risk of errors. Information is presented in a standardized way. Some consistency checks are automated.
No difference between Procure to Pay and Purchase to Pay
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You’ll sometimes hear about Purchase to Pay. It’s exactly the same procedure as Procure to Pay (P2P). The steps are identical. There’s no difference whatsoever between these two concepts. It’s just a question of semantics.
The priorities of a P2P digitization project are relatively simple :
- Simplify overly complex steps
- Automating data flows
- Boost the productivity of the staff involved
- Make your company’s purchasing reliable and secure
- Strengthening compliance
- Improving company performance
What are the differences between the Procure to Pay and Source to Pay processes?
Source to Pay is an extended version of Procure to Pay. Source to Pay includes a few additional steps before the purchase phase :
- Sourcing suppliers for a product or service ;
- Qualification in relation to a need ;
- Consultation via a formalized procedure ;
- Contractualization.
Source to Pay is essentially reserved for large companies. Some expenses represent major commitments, requiring the implementation of a robust procedure for selecting subcontractors.
Our tips for optimal Procure to Pay management
Efficient validation workflow
You need to adopt the right number of steps in your workflow to ensure that expenses comply with company policy, but also with the available budget.
Supplier database consistency
Supplier data must be regularly updated. Each new supplier must be validated by an administrator who verifies that the minimum base of necessary information is present before any order is placed.
Action traceability
Every action taken on a purchase requisition must be traced by the system. This enables precise tracking of updates made by the various parties involved throughout the process. This provides the necessary security as part of the digitization of purchasing.
Exchanges with ERP
Automating exchanges with your ERP will enable you to reach a new level in optimizing the purchasing process. These exchanges take place at several levels : receipt of products for entry into stock and payment request after receipt of invoice.
Tracking expenses
Accounting relies on the reporting provided by the solution to analyze commitments made and their budgetary impact for the organization’s various departments.
Identifying risks
Each expense is associated with a certain number of risks : exceeding authorized thresholds, suppliers not approved by the company, delivery deadlines not met, non-conformity of delivered products, processing of invoices and payments, etc…. The right Procure to Pay process architecture makes it possible to control and minimize the impact of these risks.
Automating the Procure to Pay process
The implementation of a purchasing management process requires a certain amount of formalization to identify :
- the different players at each stage : purchase, delivery and payment ;
- the levels of control useful and necessary to ensure compliance ;
- possible interfaces with ERP to integrate payment requests into accounting.
The effectiveness of your procurement policy will depend on how the process is implemented. The players involved need to know the rules, but also express their wishes. Then, the chosen solution will adapt to your needs to optimize collaboration between the various internal teams, but also with the company’s suppliers.
The transition from a process entirely managed with paper forms to a digitized e-procurement system brings greater efficiency, reduced processing times and fewer errors. There is also a positive impact on expenditure levels, thanks to real-time visibility and reinforced control of requests.
Thanks to its many features and availability in SaaS mode, digitalizing your company’s purchasing is child’s play with My Intranet HRIS !
