Procure To Pay Process

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What is Procure-To-Pay Process?- Definition

In simple terms, the Procure-to-Pay process is how an organization purchases the raw materials and services needed to do business. 

Procure-to-pay process is the coordinated and integrated action taken to fulfill a requirement for goods or services in a timely manner at a reasonable price. It involves a number of sequential stages, ranging from need identification to invoice approval and vendor payment. Steps in a procure-to-pay cycle need to be executed in a strict order.

Procure To Pay Process Aavenir

Understanding Procure-to-Pay Process

The term Procure-to-Pay, also known as Purchase-to-Pay or P2P, covers three main processes in the procurement lifecycle: requisitioning, purchasing and payment. The Procure-to-Pay process generally ranges from looking up products through to updating the accounts payable. The following activities can be found between these two stages:

  • Look up products
  • Create a purchase requisition
  • Process and authorize the purchase
  • Create the purchase order
  • Receive the goods
  • Check the order for conformity
  • Receive the invoice
  • Reconcile and process the invoice
  • Pay the invoice
  • Update the accounts payable

What do Procure-to-Pay solutions involve?

Procure-to-Pay solutions involve presenting suppliers' products to users (by means of Punch-Out catalogues, e-catalogues and APIs) and then digitising, automating and enhancing the procurement and financial processes identified above. They incorporate control, verification, validation and document management activities, thereby allowing companies to exercise greater control over their purchases and improve their efficiency.

From a technological point of view, Gartner defines Procure-to-Pay as follows: "As its name implies, a Procure-to-Pay (or Purchase-to-Pay) system is a fully integrated solution designed to support an end-to-end process that begins with goods and services requisitioning and ends with ready-to-pay files for upload into an accounts payable system. Procure-to-Pay solutions use a scan-and-capture service, supplier portal and/or a multi-enterprise network to enable suppliers to submit invoices electronically. In addition to core e-procurement functionality (including e-requisitioning, approval workflow and e-catalog management), Procure-to-Pay solutions offer purchase-order-to-invoice matching and processing for invoices that don’t match or when goods are returned."

What are the benefits of Procure-to-Pay solutions?

Procure-to-Pay solutions are tremendously effective for raising the performance bar in procurement departments by:

1.Improving process effectiveness

Automating processes reduces manpower costs, processing times and risks.

2.Increasing visibility and control

Consolidating and aggregating data gives companies clearer insights and superior control over their spending.

3.Upskilling the teams

Instead of spending time on manual and repetitive administrative tasks, procurement teams can focus on missions with greater strategic value for the company.

Since the Procure-to-Pay process is relatively easy to automate, procurement divisions can concentrate on such value-added tasks as sourcing, innovation, end-user intimacy and strategy.

Explore Additional Resources to Know More

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