Steps & Benefits of Procurement through Procure to Pay software solution
30 Sep, 2021 Amlan
What is Procure to Pay?
At its most strict level, this is the cycle whereby demand is made, a request is put in and, when the request is gotten, installment is made dependent on a receipt from the provider.
What procure to pay (or P2P) really alludes to is a mechanized framework that incorporates acquirement with creditor liabilities to smooth out the interaction, guarantee precision & make efficiencies in cost & time.
In simple words, we can tell it is an automated process where the integration of procurement is done with accounts payable which enables the process to get streamlined with accuracy & create efficiencies in time & money.
Different steps in Procure to Pay :
- Purchase Requisition: Once the need for a specific product or service is identified and finalized by the management, the request goes to the procurement department where the P2P process initiates.
- Purchase Order: First the Procurement department will underdo the Screening Process where they will finalize the desired supplier that will be supplying them, followed by creating a purchase order that is automatically routed for approval and transmitted to the supplier.
- Receipt of Goods & Services: Upon the Goods or Services provided, the Supplier will send the invoice to the accounts payable department where the Procurement will enter the details in the system.
- e-Invoicing: The supplier sends the Electronic invoice to the accounts payable through the Portal that is a part of P2P.
- Approval Workflow: With an automated P2P solution, invoices pass through 2, 3-way approval & sent to organization ERP for Payment. Workflow help in verifying the process, say invoice submitted has no signature & rejected will go straight to the supplier with a reason stating that signature is missing. If all things are right, it will pass all the approval & go straight to ERP for Payment.
- Payment: It is the last process where the Payment is made electronically and the receipt or payment advice is shared with the customer in the portal which will stay as a document.
Key Benefits of Procure to Pay :
- Streamline the Procurement Process: It provides connectivity between the organization which helps in streamlining the process and can easily find the work where is it is pending.
- Reduces invoice Processing: By going paperless and storing the e-Invoice in the System for future reference, it not only saves paper but time and energy involved in it.
- Visibility: With the automated P2P Process, buyers and suppliers get 100% visibility throughout the supply chain viewing the Invoice status on a real-time basis.
- Relationship Improvement: By utilizing the Supplier Portal, suppliers can know when they are going to receive the payment and it gives them better decision making.
- Data for Decision Making: Robust P2P solutions offer robust on-demand reporting capabilities. By using real-time and historical data provided, companies can gain greater control over cash flow and working capital.