Source-to-Pay

What is source-to-pay?

Source-to-pay (S2P) is a comprehensive process that encompasses all aspects of the procurement lifecycle, from identifying and sourcing suppliers to receiving and paying for goods and services. S2P is essential for businesses of all sizes, as it helps ensure that they are getting the best possible deals on the goods and services they need, and that they are complying with all applicable financial regulations.

Whether or not an organization has a procurement team, the following responsibilities must still be handled by someone in the finance department. Absent a procurement lead, often the controller assumes these responsibilities.

• Developing and implementing S2P policies and procedures.
• Overseeing the budgeting and forecasting process for procurement.
• Negotiating contracts with suppliers.
• Processing and approving purchase orders.
• Matching invoices to purchase orders and making payments to suppliers.
• Reconciling accounts payable and ensuring that all financial records are accurate and up to date.

Benefits of S2P.

S2P can provide a number of benefits including:

• Improved efficiency and productivity: By automating many of the manual tasks involved in the procurement process, S2P can help accountants save time and be more productive.
• Reduced costs: S2P can help accountants reduce costs by streamlining the procurement process and by negotiating better prices with suppliers.
• Improved compliance: S2P can help accountants improve compliance with financial regulations by providing a more transparent and auditable record of all procurement transactions.
• Reduced risk: S2P can help accountants reduce the risk of fraud and other financial losses by providing a more secure and controlled environment for procurement transactions.

S2P vs P2P

Source-to-pay (S2P) and procure-to-pay (P2P) are two related processes that are involved in the procurement of goods and services. However, there are some key differences between the two.

S2P is a more holistic approach to procurement that encompasses the entire process, from identifying needs to managing supplier relationships. P2P, on the other hand, is a more transactional process that focuses on the execution of purchase orders, receiving goods and services, and processing payments.

The focus of S2P tends to be on the strategic sourcing and supplier relationship management, and is therefore more important for companies with a lot of direct spend on the materials that go into their product.

P2P focuses on transactional execution of purchase orders, receiving goods and services, and processing payments. The stakeholders in both of these processes involve cross-functional teams including procurement, finance, operations, and IT.

How is S2P used?

• To develop and implement S2P policies and procedures tailored to the specific needs of the organization: These policies and procedures should cover all aspects of the procurement process, from identifying and sourcing suppliers to receiving and paying for goods and services.
• To oversee the budgeting and forecasting process for procurement: This process involves estimating future spending on goods and services and ensuring that the organization has the necessary budget in place to meet its needs.
• To negotiate contracts with suppliers: Finance teams can help ensure that the contracts are fair and equitable to both parties, and that they protect the organization’s interests.
• To streamline the processing and approving purchase orders: This process involves reviewing purchase orders for accuracy and compliance with company policies.
• To match invoices to purchase orders and make payments to suppliers: This process involves verifying that invoices are accurate and complete, and that they match the goods or services that have been received.
• To reconcile accounts payable and ensure that all financial records are accurate and up to date: This process involves verifying that all invoices have been paid and that all payments have been recorded accurately.

Tips for using S2P.

S2P is an essential process for businesses of all sizes. Accounting teams play a vital role in the S2P process, as they are responsible for a number of key tasks, such as developing and implementing S2P policies and procedures, overseeing the budgeting and forecasting process for procurement, negotiating contracts with suppliers, processing and approving purchase orders, matching invoices to purchase orders and making payments to suppliers.

• Decide if a S2P or P2P system is a better fit for your company: If strategic sourcing is important to your business’s success then a S2P system is probably the best choice. There are a variety of S2P systems available, so it is important to choose a system that is right for your organization’s size, industry, and budget.
• Implement the S2P system properly: It is important to implement the S2P system properly in order to reap the full benefits of S2P. This includes training all employees on how to use the system and developing a process for managing procurement transactions.
• Integrate the S2P system with other financial systems: Integrating the S2P system with other financial systems, such as ERP and accounting systems, can help to streamline the procurement process and improve the accuracy of financial data.
• Monitor the S2P system regularly: It is important to monitor the S2P system regularly to ensure that it is working properly and that it is meeting the organization’s needs.

How Airbase helps with S2P.

Airbase is a P2P system and has support for many of the processes in an S2P workflow. It is excellent at ensuring compliance, and providing visibility and control over spending. It also provides approval workflows for all stakeholders. Airbase is a good fit for those looking for a S2P that doesn’t need additional support for strategic sourcing of goods and services.