Procure-to-pay (P2P) software originated from the need to oversee the process of acquiring supplies for manufacturing and other industries, and to manage inventory in the retail sector. Procurement has faced numerous challenges in recent years: transportation issues, inflation, labor shortfalls along the supply chain. But organizations can overcome those difficulties and position themselves to grow and thrive — with the help of the right technology. The best P2P solutions strengthen cost control, nurture supplier relations, and improve visibility into the supply chain. A PwC study found that 80% of companies with highly digitized procurement processes were able to create value from the data created by their P2P solutions.
What is P2P software?
P2P software automates and streamlines the process of procuring goods and services, from requisition to payment. It includes modules for purchase order creation, supplier management, invoice processing, and payments. The goal of P2P software is to increase efficiency and accuracy in the procurement process while also providing visibility into spending and supplier performance. P2P software supports AP processes by automating procurement activities and capturing relevant financial information
What should I look for in a P2P solution?
- Purchase order management: You need to be able to create, approve, and track purchase orders, as well as manage any changes or cancelations.
- Invoice processing: The software should be able to process invoices, match them with POs and receipts, and automatically approve them for payment.
- Supplier management: How easy is it to update supplier contact details? Can you track supplier performance?
- Spend analysis: The best platforms will improve visibility into your company’s spending, so you can identify cost-saving opportunities and track the performance of different suppliers.
- Approval workflows: Customizable approval workflows ensure that the appropriate individuals approve POs and invoices before payment is made.
- Reporting and analytics: The software should provide reporting and analytics capabilities to help you track procurement performance, identify areas for improvement, and make data-driven decisions.
- Integration: You want to ensure that P2P software can integrate with other systems, such as accounting, inventory management, and enterprise resource planning (ERP) to ensure data consistency and streamlining of the procurement process.
- Security: It’s more important than ever to look for robust security features to protect sensitive data, such as encryption and multi-factor authentication.
- Cloud-based and easy to use: Employees want to be able to purchase what they need to get their job done without a lot of bureaucracy. A cloud-based, intuitive platform helps them make compliant purchases, even on the go.
- Good support and customer service: The software should provide good customer service and technical support to help you troubleshoot issues and ensure that the software is working as intended.
When does a company need P2P software?
Companies of any size and industry can benefit from P2P software, but it can be especially useful for larger companies with large inventory needs and multiple departments or locations that need to purchase goods and services.
P2P software often benefits companies when they reach a high volume of POs and invoices to process, and want to increase efficiency and accuracy in the procurement process.
What are the steps in the P2P process?
The steps in a typical P2P process are as follows:
- Requisition: An employee identifies a need for goods or services and raises a requisition.
- Purchase order: The requisition is reviewed and approved, and a PO is generated and sent to the supplier.
- Receipt of goods or services: The supplier ships the goods or provides the services, and the company receives them and confirms receipt.
- Invoice: The supplier sends an invoice to the company for the goods or services received.
- Invoice validation: The company validates the invoice to ensure that it matches the PO and receipt of goods or services, and that the prices are correct.
- Payment: The company approves the invoice and makes payment to the supplier.
- Close the loop: Once the payment has been made, the P2P process is closed and the transaction is booked in the general ledger.
- Reporting and analytics: The data collected during the P2P process can be used for reporting and analytics to identify cost-saving opportunities, supplier performance, and other actionable insights.
The specific steps and requirements may vary depending on the company’s internal policies and procedures, as well as any relevant regulations or laws.
Using P2P software can provide a number of benefits, including:
- Increased efficiency: Automates and streamlines the procurement process, reducing manual effort and errors, and increasing the speed of processing POs and invoices.
- Better visibility into spending: Provides visibility into spending and supplier performance, allowing you to identify cost-saving opportunities and make decisions based on up-to-date data.
- Improved compliance: Automates compliance with procurement regulations and internal policies, reducing the risk of non-compliance and penalties.
- Enhanced supplier relationships: Allows teams to manage suppliers and track their performance, which can help improve supplier relationships and negotiate better terms. Automating payment can reduce the number of late payments.
- Reduced costs: Reduces costs by automating processes and identifying cost-saving opportunities, as well as reducing the risk of fraud and errors.
- Better collaboration: Allows for remote access and collaboration by authorized users, enabling teams to work together more efficiently.
- Better decision-making: Generates relevant data and analytics to help make informed decisions.
- Tighter security: Provides robust security features to protect sensitive data, such as encryption and multi-factor authentication.
How P2P software improves visibility into company spending.
Organizations benefit from a unified view of all spending, including spending by subsidiaries. With consolidated and up-to-date financials, they can make informed decisions without having to bring together multiple systems and databases.
P2P software streamlines the procurement process, from requisition to payment, and integrates with an organization’s accounting and financial systems to ensure that all relevant financial information is captured and recorded accurately.
Integrations with contracts management software also improve visibility by ensuring that procurement activities align with the terms and conditions of their contracts, reducing the risk of contract violations and improving compliance.
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