What is Procure-to-Pay Automation?
Procure-to-pay (or P2P) automation is the method of accelerating your P2P process in order to eliminate the manual steps and time-consuming tasks that are currently involved.
Procure-to-pay is a multi-step process that companies follow in order to request goods or services, and invoice and pay the vendor providing those goods or services, with a lot of communication in between. Each action or function of the process needs to be fulfilled in a timely manner, with multiple stakeholders involved with a role to play.
The trouble is, as companies scale and more payment requests are made, the harder it is for finance teams to keep track of all the moving parts, and the more opportunity for important data, documentation, and even spending to fall through the cracks.
Automating this process eliminates or greatly reduces the need for manual tasks, spreadsheets, and emails, and instead allows users to stay up to speed regarding the important data and information they need.
Why You Shouldn’t Hold Off On Automating
Manual processes are outdated. And growing companies in particular have trouble maintaining efficient procurement and financial processes when they don’t grow technologically alongside their teams. Don’t resist or put off the idea of automating for a later date. There’s never been a better time to bring your P2P process up to speed and modernize your business’ spend management at the same time.
If you’re honest with yourself, you know that there’s a lot that can be improved upon. Think of all the time your team spends trying to keep things in order, attempting to prevent important data from getting lost or executed with mistakes. When something in the procurement process is handled incorrectly and is caught, it needs to be redone. When mishandlings go unnoticed altogether, they can lead to missing information and wasted spending. Both scenarios are hindering your business and the goal is to create an environment where neither are occurring.
As time goes on dealing with procurement manually, more mistakes will likely occur – many that you probably aren’t even aware of. Each leads to frustrated employees just trying to do their jobs and keep their teams and managers happy. Mistakes and time delays also have the potential to frustrate vendors and harm mutually beneficial working relationships.
Maybe you’re sure you want to explore procure to pay automation but you’re not sure what processes in your business are suffering the most. Automating will help you identify all the areas that could use improvement, identify maverick spend, as well as keep track and manage your business cash flow. So take the time to explore procure to pay automation options; automation leads to overall stronger procurement management and happier employees.
Steps to Automate Your Procure-to-Pay Process
There are five important parts of the process that need excellerating before the entire P2P process can be considered automated. Pay attention to the amount of time it currently takes for you to complete each part of the process, what parts are causing you and your team the most friction, as well as where you think you have the most to gain from automation.
Also known as a purchase requisition, this typically manual process requires the requestor to submit a form detailing everything about the goods or service they want to purchase, including a description, the department, budget line, vendor, and more.
Automating the purchase requisitions, or purchase request process by integrating it with your ERP or existing procure to pay software will alleviate the need to manually fill in information, eliminate the opportunity for mistakes, and expedite and streamline the entire approval process.
Most teams who work with vendors regularly, develop strong relationships with them. But with a surplus of vendors it can get difficult to accurately recall which ones you worked with when, whether the experience was satisfactory to both parties, or if any deals were made. By automating your vendor database and being able to easily search through it, you can access your previously used vendors before taking the time to onboard new ones. You’ll be able to find all the relevant information you need to make your decision including what the goods and services supplied were, the vendor’s pricing for these goods or services, and if everything went smoothly with the order and delivery process.
Forming and maintaining strong relationships with vendors is a huge time saver. And having an automated more efficient selection process makes choosing a vendor easier for you, as well as visible for your team. If for any reason you’ll need to check back on discrepancies, you’ll always have easy access to proof of purchase, receival, invoices, vendor payment, and more. Automating with a procurement software also helps with contract management including providing important renewal reminders, as well as ensuring contract compliance. This can act as a safety feature to keep you covered in the event of any accusations of fraud.
Purchase orders and approvals
With an automated procure-to-pay process, a purchase order can be set to be created immediately after the purchase request was approved. Not to mention that this PO won’t have to be filled in manually, reducing the chance for errors and keeping all relevant stakeholders apprised of its information and status at the same time.
Accounts payable teams can breathe easier with a solution that automates the tedious parts of invoicing, like entering vendor data and details. No longer taking a lot of time and attention, a formerly error-prone process becomes extremely simplified.
Users can automatically route invoices to the approvers (no need to input that information yourself) automation makes work smoother and easier within your organization – workflows are accurate and each PO has an invoice that will need to be attached to it (invoices know where they need to go) better vendor relationships they are kept happy by being kept up to date on their invoice status eliminating the need for them to call and ask accounts payable when their payment will arrive.
With payment automatically issued to the vendor, there’s no need for inputting bank routing numbers or using a third party application to process and send payments. Most teams who use an automated P2P solution integrate it with their ERP and in these cases, an approved invoice and subsequent payment will be sent to your system after processing through the ERP.
Special features to consider in procure-to-pay automation
- Automation is a huge selling point. Automatically notify selected stakeholders to approve or reject a new request, when that request gets rejected or approved, and when a PO is opened following a request approval.
- Automatically notify selected stakeholders when purchase orders are approved.
- Automated renewal reminders so you don’t have to check back at old contracts or accidentally miss the timeframe for renewal.
Data log and audit history
- Keep an accurate log of activity throughout the entire purchase order and approval process that can always be accessed and looked back on.
Analytics and forecasting
- Make sure your automated solution provides you with the reports and analytics you need to best understand your organization’s spending, to budget ahead, and to make changes to budgets in real time if that need should arise. Finance teams will be able to budget better, no longer fearing going over budget, instead saving time and money in the long run.
- Let team members work in the way that’s easiest for them, so each team isn’t forced to use the same style of workflow.
- Sometimes certain steps won’t be needed or certain fields on a form should be skipped by specific teams.
Ultimately, your team needs to be able to access the right information, whenever they need it. Automating your procure-to-pay process helps gather and keep everything in one place, making important data accessible and any future actions easier to carry out. It will also help streamline vital communication both within teams and between departments.
Each of these special features greatly helps you and your team expedite business processes, so don’t be tempted to skip them.
S2P vs P2P: What to consider
S2P, or source to pay is often mentioned around the P2P topic. Very similar to the P2P process, source to pay takes things a little further when dealing with vendors or suppliers and supply chain management. S2P solutions allow you to search for suppliers, submit RFQs (request for quote) and RFPs (request for proposal), and lets the suppliers participate in bidding for the opportunity to work with you.
S2P is often a precursor to P2P processes, as it can be easily incorporated with and beneficial to the greater procurement process overall.
How Approve.com can help with procure-to-pay automation
Every important consideration we believe you should make when automating your procure to pay cycle is one that Approve.com has already provided. With Approve.com’s simple procurement solution, users can gain the control and visibility necessary to keep teams and stakeholders collaborating seamlessly. This not only translates to happy employees and happy finance managers alike, but to an overall expedited process that saves businesses money.