David Essex in TechTarget defines procure to pay nicely as the process of requisitioning, purchasing, receiving, paying for and accounting for goods and services. The emphasis is that this is a process and not a technology. However, you can enlist a software to offer procure to pay solutions.
The procure to pay process is a combination of intricate functions that when done manually, can be both time-consuming and susceptible to errors. Procurement software can serve as a procure-to-pay software and really benefit your organization by efficiently managing this process, decreasing both time on tasks, errors and manual workflows.
The procure to pay process has 6 steps that a procure to pay system can help with. The steps include requisition, sourcing, purchase order creation, receipt of items, payment and reporting.
From procuring goods to paying for them, procurement software can help efficiently navigate these steps. If you want to better understand the steps in the procurement process, you can click here for a more detailed explanation.
Below we will explore how procurement software can facilitate these 6 steps across departments, responsibilities and functions. Thus offering a seamless procure to pay solution.
A procurement software can assist in submitting an official request to the approval team to ensure purchases are within scope and budget. Your procure to pay solution will allow you to select or create items from a master database to request approval to purchase. You can create and approve requisition forms from any device (phones, tablets and computers).
The procure to pay tool also allows for taking advantage of economies of scale. By being able to search, filter and review your requisition forms, you can combine multiple requisitions together to increase cost savings and efficiencies.
A procurement software with the features of a procure to pay tool can save you time and blunders by allowing for configurable approval hierarchies. You can put limits on who you can buy from and dollar amounts on requisitions by person, department or for everyone.
This level of control ensures you are looking at the most important details for your business. The procure to pay solution saves time and bottlenecks by allowing items below a threshold to be automatically approved.
With procurement software serving as a procure to pay solution, it can help you find what you want to source and how to source them. The software can create sourcing plans that involve finding suppliers, getting costs, setting out terms and conditions for those terms.
All within the procure to pay tool, you or the requisitioner can detail out your requirements and allow for the attachments of documents. Record keeping of both communications and other important paperwork can be initiated and managed within the software.
Not only can you create and maintain important documents such as RFQs and RFPs, the procure to pay solution can help evaluate your options. You can use dashboards and other reporting to see side by side comparisons that are useful in ensuring you are getting involved with the best partner available.
The procure to pay tool can then allow you to use all of the information to successfully negotiate and grant a partner a deal. You also have the ability to store multiple partners in case you find more than one suitable source of an item.
A procurement software has procure to pay tools that allows for the creation of purchase order forms directly from approved requisitions and/or after a sourcing event. The procure to pay tool is able to let you create and maintain formal purchase orders all within one software.
The procure to pay solution has the capability of producing customizable letterhead and automated PO numbers. It also gives the ability to have other personalized fields depending on the business and supplier.
Within the procure to pay tool, you can duplicate purchase order forms, download and attach to emails all within the system. You can also set forms for vendor confirmations and follow ups to better manage the delivery of purchase orders.
The ability of the procure to pay tool to manage the quantity, costing, delivery dates and general requirements of the order can not be understated. Having all the documentation of changes and approvals all in one place drastically reduces clutter.
Once purchase orders are ready to be finalized, the purchaser, purchasers organization and suppliers approval can all be managed within the procure to pay solution.
Receiving of Items
The key to procurement software is visibility. By using the procure to pay tools, you are able to effectively see the units received into inventory on the correct purchase order all within the software. This is key especially when you are able to view in real time.
A procure to pay solution has the ability to account for the goods that were delivered and allows you to be able to communicate any discrepancies. Reporting any issues in quantities or quality in a timely fashion can quickly resolve any issues from spiraling.
A procure to pay tool can offer delivery notifications as well as store documentation associated with the delivery. This level of convenience offers a piece of mind that you will always have a central point of reference to go back to in case you need to.
Some important documents a procurement software can store are:
- Packing Lists - signed documentation of carton/pallets counts of a shipment
- Shipping Bills - any costs invoiced for the shipping of the products
- Delivery Notes - any additional notations or documents provided at the time of delivery
Payment of Invoice
Once items and units have been received, counted and confirmed, you need to match up against the supplier invoice and the original order. A procure to pay software can help automate reconciliation.
Ideally you want to match what was originally ordered versus what was received versus what was invoiced for. This is what is called a 3-Way match. A procure to pay solution will streamline this process for a higher level of control over your spending.
A procure to pay solution in a procurement software will also streamline your approval workflows. Again you can automate rules and hierarchies to ensure that items that are supposed to be paid are paid, and other items have additional checks and balances to ensure payments are correct.
Having all the documentation associated with a purchase order helps as it makes reconciling easy. With all details documented within the procure to pay solution, you can easily see what is happening for each invoice. Procure to pay tools will take the detective work out of reconciliation.
With the ability to auto-populate invoices as well as the ability to integrate with accounting softwares for payment, procure to pay tools really enhance your organizations efficiency. Reed company’s Head of Financial Accounts was able to use procure to pay software to save days on reconciling invoices and compiling reports. You can read all about how they were able to do this by clicking here.
With procurement software you are able to track and report on each step of the process. It is important to track the process so you can improve and prioritize business essential items.
With the reporting from your procure to pay tool, some of the things you can ensure are:
- Invoices are getting paid on time - this helps in timely deliveries and good supplier relationships
- Items are being received properly - you want to track supplier performance based on delivery times and order fulfillment accuracy
- Good spend management - controlling expenses are important to every company
- Order efficiency - ensuring you are ordering in an optimal way whether frequency, quantities or vendor
The procure to pay tool has the ability to pull a plethora of information out of the software and report on it. This allows for your organization to grow as you are able to fix the inefficiencies that the reporting allowed you to pinpoint.
Accountability is important. And the only way to hold the necessary parties accountable is by tracking the data. With the help of a procure to pay solution, you have complete visibility through the whole process.
Caroline Banton says it best in her article on purchase to pay solutions on investopedia.com, “the goal of a purchase-to-pay system is to improve efficiency and financial controls since finance departments have timely purchasing data at their fingertips.”
Procure to pay tools are a hallmark of a profitable organization. The competitive advantages of implementing a procure to pay software can be enormous. A procure to pay solution streamlines workflows through automations, integrations, approval requests, processing, data and document management amongst other things.
Procurement software as a procure to pay solution leads to time saved. Time saved is money saved. And money saved is money earned! Maybe it’s time to invest in your procure to pay solution.