A look at the P2P process
The Procure to Pay (P2P) process is conveniently illustrated in the graphic below. It begins by identifying a need and finding the correct supplier to fulfill that need. The next crucial step is vetting the supplier’s reputation through research, collecting the invoice, and setting them up to receive payments from your company.
Ardent Partners State of ePayables 2015 report aptly describes the ePayables Framework in three phases:
“Receive” means the collection of invoices by accounts payable. This can be done a number of ways, and is the most commonly automated part of the procure to pay cycle. Invoices are collected via fax, email, PDF, paper, or through electronic methods.
In the “Process” category is where the real heavy lifting really begins.
The validation-of-invoices process begins with matching to purchase orders and receipts. This ensures the right invoice is being paid for the correct amount. Approvals are gained in this part of the workflow as well.
Lastly, we arrive at “Pay”. The payments piece is the most overlooked opportunity in the P2P process. This is when timeliness really counts as vendors are awaiting correct and efficient payments.
This part of the process is often plagued by missed savings opportunities due to lack of automation, late payment fees, and high check processing costs. These problem areas indicate the larger issue going on with a business' P2P process—an automation product can address these payment challenges.
Ten typical pain points within the P2P process
At a recent conference, I asked a group of P2P professionals from various organizations about their pain points. Here’s a list of the 10 issues they encounter while managing the process.
- An easier way to monitor number of invoices waiting for payment.
- Visibility into where the invoice exists in the approval process.
- Strategies for taking advantage of supplier discounts.
- Tips on getting timely invoice approvals.
- An intuitive workflow to send invoice approvers along.
- Easier system for processing PO invoices and authorization.
- Supplier portal visibility so suppliers can see invoices without assistance.
- Consolidation of suppliers in supplier master file.
- Tighter P-card controls within the organization.
- Overwhelmed with where to begin with choosing a procure to pay solution for AP automation.
A helpful approach to P2P automation
Choosing the best place to start with cloud-based automated systems is often the hardest part. The area of the P2P process in most dire need of automation takes precedence. This is different for every AP department.
Before disrupting the whole process, make a list of the biggest pain points in your back office and map those to a specific P2P process. Rank those in order of importance. Go back and look at the P2P graphic above if that helps. Start small if you must. Whether it's a purchase order workflow issue or a problem with internal invoice approvals, pinpoint where the breakdown in efficiency is happening, and you’ll be on your way to a better back office.
About the AuthorFollow on Linkedin Visit Website More Content by Chris Doxey