Procure-to-Pay, aka “Purchase to Pay,” “Req to Check,” “Order to Cash,” and P2P refers to “a seamless process enabled by technology designed to speed up the process from point of order to payment,” according to the Chartered Institute of Purchase and Supply (CIPS).
The typical procure-to-pay (P2P) cycle includes the following steps:
Most P2P systems exist to further streamline the process. Procurement technologies such as cloud-based platforms, analytics, and AI processes allow for advances in the procurement process. Even more, CIPS reveals, “the digitalization of procurement and supply chain practices promises to bring walls down thereby create an interconnected and transparent ecosystem among firms, suppliers and customers.” According to CIPS, firms will not be restricted to physical routines. The digital era is ushering in autonomous processes.
Don’t worry, automation does not eliminate the need for human capital, it just changes the scope. Curious? Learn more HERE.
CIPS notes that those entities that utilize (and require) P2P systems, “are motivated by not only process and production costs saving associated with digitalization strategies, but also by enhanced productivity and efficiency.” While it is acknowledged that most firms exploring digitization of their P2P systems require investment of time and money — 46% identify expense and 42% identify time as obstacles—90% of firms are motivated by the long term payoff of the initial investment in Pay Systems.
While many P2P processes are established and effective, the advent of new process automation technologies mandates that anyone operating in a P2P space integrate automation into their systems. Technology such as e-procurement software helps manage the entire P2P cycle.
According to Procurify, “top-performing firms have using e-procurement have a two-day purchase order cycle time vs. seven-day cycle times for top-performing firms without an e-procurement solution.” In other words, integrating new technologies and automation into your procurement cycle will increase productivity, decrease cycle time, and cut costs.
While looking to integrate new technologies and automation into your P2P process, remember to adhere to best practices. The American Productivity & Quality Center (APQC) identifies three significant ways for effective collaboration in a P2P process:
- Identify and adhere to a standardized procure-to-pay process
- Communicate regularly
- Put both [procurement and accounts payable] in the same environment
