“Procure-to-Pay”, a.k.a. P2P, is a term often used for transactional or tactical procurement.
It is a set of processes that starts with raising a request for a service or product and ends with payment of the Supplier.
Functionally the process stretches across the silo’s of procurement and finance and touches every employee that raises or approves Requisitions. In most organizations P2P technology has almost the same number of users as email illustrating the impact of Change in this domain.
At S2P Professionals we have defined P2P as shown in the figure on the right. Note that it depicts the standard process for indirect spend. Processes for managing direct spend often deviate from this standard.
spend visibility: understand who, how much and where your organization spends its money
contract compliance: ensure you buy against the terms and pricing agreed in your contract
maverick spend: bring more spend under control and manage it more effectively
efficiency: Mobile access, eInvoicing, automatic matching & payment all contribute to faster- and more efficient processes
governance: record and manage who approves expenditures in line with your company’s policies and applicable law
stakeholder management: position procurement and finance as service providers rather than toll-gate managers
business intelligence: efficiently provide users and management with BI relevant for their role
Typical KPI’s for P2P
Requisition-to-Order cycle time
Invoice-Approval cycle time
Expense-Approval cycle time
% of PO’s processed electronically
% of invoices processed electronically
% of Pre-Approved spend
% of Captured savings
% On-Contract spend
Holistic view of P2P
S2P Professionals has a lot of experience with implementing and optimizing P2P processes. We can help your organization to deal with each of the challenges above and push your P2P performance beyond that of your industry peers.
Although this information talks about Procure-to-Pay as a separate process; that is not the case. We are a strong advocate to analyse and manage Source-to-Contract and Procure-to-Pay for indirect spend using end-to-end processes and technology.
What does the Cloud add to P2P?
Modern Cloud technology allows organizations to automate the P2P process in a much more efficient and transparent manner. Whereas traditional technologies needed significant resources for development and integration with ERP and other business tools; today’s Cloud solutions offer best practice “out of the box”.
Features that were traditionally only for the happy few or simply not available are now accessible for every organization at a fixed monthly fee; i.e. Mobile access, real-time benchmarking, advanced reporting, multi-lingual support,… Implementation of P2P Cloud services tends to be more straightforward due to the lack of customization and standard integration methods.
The business case for automating P2P
Modern SaaS P2P solutions offer organization access to best-practices out of the box. The benefits can be tremendous and in the form of process efficiencies, reduction of working capital, improved contract compliance and more spend under control.
For most organizations with a greenfield scenario the business case for SaaS Source-2-Pay offers an ROI >25% and a payback time of 12-18 months.
Many business users are now enjoying a consumer-like online shopping experience using catalogues for indirect spend. Catalogue buying is the preferred model to raise requisitions. User Adoption for catalogue buying is usually high and employees find it easy. Raising Requisitions resembles an online purchase on eBay or Amazon.
Punch-Out catalogues are a very efficient way to offer users immediate access to a wide range of indirect products and services. They make good business sense in categories that have large volumes of products that need regular updating such as office supplies, consumables and IT hardware. Masterdata management is crucial for effective use of PO catalogues. To ensure the line-items in a requisition are booked to the correct GL codes a solid and industry standard classification system is crucial. Most Suppliers offering PO catalogues are standardized on an industry standard such as UNSPC, NAPCS and GS1. Aligning your internal classification system with an industry standard will significantly improve your agility and ease of implementing PO catalogues.
– implementation of SaaS Suites for Source-to-Pay by large corporate organizations
– use of supplier networks and Punch-Out catalogues to reduce cost and complexity of supplier integration.
– intelligent tools and real-time benchmarking to analyse and improve Procure-to-Pay performance
– interim Procure-to-Pay professionals
– performance analyses and improvement programs
– P2P implementation projects for Ariba, SAP, Coupa, Determine, eSize and Basware P2P solutions.
– Supplier onboarding and integrations
– catalogue management,
– training & support
If you want to learn more about implementing or improving performance of Procure-to-Pay for your organization contact us via +31 (0)85 3034687 or email@example.com.