The procurement process is a major ongoing effort for many organizations. Over time, it becomes a larger task as additional vendors and transactions are needed to support a fast-growing company. At some point (sooner than most organizations would like), the procurement process outgrows accounting’s ability to keep up.
Procure-to-pay (P2P) technology helps these organizations stay ahead of a sea of invoices. It automates the most time-intensive and repetitive tasks—and provides a wealth of data in the process.
Today we’ll look at the process of using technology to enable your purchasing practice. Read on for answers to the most common questions:
- What is procure-to-pay technology?
- What are the benefits of moving to automated procure-to-pay technology?
- What are the best tools for procure-to-pay technology?
Download the free guide: Choose the Right Procurement Technology With This Decision Matrix
What is procure-to-pay technology?
Procure-to-pay technology is a term used to describe the systems and processes organizations use to manage purchasing supplies and services. The technology typically includes creating purchase requests, building and submitting purchase orders, tracking purchases, invoice matching, and issuing payments.
Choose the Right Procurement Technology With This Decision Matrix
Find 15 must-ask questions to narrow down your software search and make your research process MUCH easier.
What are the benefits of procure-to-pay technology?
Procure-to-pay technology helps companies simplify and optimize their business processes to realize cost savings. Specifically, procurement software helps in several ways.
Streamlined order and payment
Ordering and payment processing are time-consuming. Even when the process goes smoothly, it requires hours of attention and manual labor for your accounting or procurement teams.
Automating these processes allows approval, ordering, and payment to proceed through the procurement system in the background. This frees your procurement team or accounts payable department to focus on more valuable activities.
Reduced overhead
Keeping staff busy with tedious manual processing isn’t just slow, it’s costly. Technology allows your current team to do their job more efficiently, eliminating the need to expand future headcount just to keep up with the growing mountain of invoices.
Technology also eliminates errors associated with manual entry, meaning your accounting team spends less time chasing down discrepancies and more time completing impactful work.
Better price efficiency
When you know how much you order and which suppliers offer the best incentives, you can optimize your procurement process to take advantage of strong supplier relationships. A P2P solution makes it possible to quantify your supplier relationships, identify areas of redundancy, and negotiate better terms with suppliers.
Access to data
A centralized process leaves a detailed audit trail. This wealth of information drives better decision-making, optimizes negotiations and pricing, and reveals opportunities for more process refinement. Spend management becomes far easier when most (or all) of your procure-to-pay processes are automated.
Reduced risk
Third-party vendor risk is both expensive and difficult to control. A fully transparent process reduces these risks by eliminating opportunities for mistakes and fraud.
Technology like Order.co also gives buyers secure access to pre-approved vendors to eliminate problems from fraudulent or low-quality suppliers.
Choose the Right Procurement Technology With This Decision Matrix
Find 15 must-ask questions to narrow down your software search and make your research process MUCH easier.
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Top 5 procure-to-pay tools
Selecting the best procurement solutions is vital to a high-performing procurement process. Check out the following best-in-class tools when considering a purchasing solution for your organization.
To read detailed reviews for these tools and more, find full reports in this review.
Order.co
Order.co is a simple yet powerful solution for purchasing. Order.co offers robust features and a strong user experience to centralize your procure-to-pay process.
Order.co allows even casual users to buy from a network of over 15,000 pre-qualified vendors within our network.
Pros:
- Provides a ‘frequently ordered item’ feature for fast re-orders
- Creates automatic general ledger (GL) coding and correct allocation every time
- Invoice consolidation feature allows you to pay hundreds of invoices with one click
Cons:
- While Order.co is constantly adding vendors, some users expressed that more pre-loaded curation options would streamline the catalog-implementation process
PRM360
PRM360 offers procurement automation for enterprises and the mid-market. This platform focuses on supplier bidding infrastructure for supplies (e-procurement), giving teams access to transparency in the vendor-bid process. Pay automation is a key feature of the system.
Pros:
- Easy to use and customizable in both its dashboard and workflow development
- Notification system keeps users up to date on bidding and order changes
Cons:
- Loading speed can be an issue for some users
- Some teams would like the platform to add a multi-login feature
Coupa Procurement
Coupa Procurement helps enterprise businesses manage purchasing, from intake to payment. It allows users to purchase goods with buying guidelines and spend limits and to submit a purchase requisition within the system. The platform enables easier supplier management, inventory management, and supply catalog curation.
Pros:
- Fast and easy-to-use platform that allows casual users to build POs and submit requests independently
Cons:
- Users report a learning curve or the platform, which slows initial use
- Reporting is a little stiff and sometimes requires third-party reporting tools
SAP Ariba
SAP Ariba is a SaaS-based procurement system for organizing purchasing, budgetary controls, and cash flow management. The platform offers guided purchasing, invoice automation, and reporting solutions to automate buying.
Pros:
- For savvy users, SAP offers a lot of customization and strong integrations with ERP, accounting, and other tools
- It offers interconnected systems potential that saves time and extends data capabilities
Cons:
- Casual users may encounter difficulties using the system as many feel it lacks an intuitive UI
- Some users had trouble getting questions answered through customer service
Basware
Basware enables data-driven decisions through transparent data. This procure-to-pay software solution streamlines purchasing and invoicing using artificial intelligence (AI). The company is eco-conscious, using the platform to help customers shrink their carbon footprint and increase sustainability.
Pros:
- Invoice automation is a key feature
- Data capture capabilities are highly accurate
- Good tool choice for P2P-savvy users
Cons:
- The system is a little basic for some applications
- Improved platform coding and better roll-up and approval workflows would improve the experience
Choose Order.co for superior procure-to-pay technology solutions
Order.co provides the best of both worlds for users seeking procure-to-pay software. It’s a data-rich, dynamic platform that satisfies the requirements of back-end users. It also provides the flexibility and intuitive functionality that makes ordering easy for casual users across various locations.
Use Order.co to create an ideal procurement environment for users in every level and department:
- Intuitive, flexible UI that allows your company to order from thousands of approved vendors or user-added vendors with ease
- Powerful, AI-enhanced accounting and general ledger (GL) coding features that accurately record purchase categories without manual input
- Risk-savvy features, including three-way matching and spend analysis tools that provide full visibility and confidence in the numbers
- Easy payment features that enable accounting to pay hundreds of invoices in a single transaction
If you’re ready to disrupt your manual P2P process with an industry-leading, robust, and scalable procurement management solution, sign up for an Order.co demo today.
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Schedule a demo to see how Order.co can simplifying buying for your business.
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“Our best-case scenario, maybe we’re 60 to 70 percent revenue by the end of the year. And that’s just a break even — and only that if I’m not paying my debt service,” says Elliot Nelson, owner of McNellie's Group, which operates 20 restaurants across Arkansas and Oklahoma.
McNellie’s Group faces the same reality as all businesses trying to reopen in the midst of the COVID-19 pandemic.
Revenue is down. Expenses are up. Carelessness with cash is not an option.
After speaking with hundreds of finance teams across the country, we know that a weak purchasing process unnecessarily leaks cash out of your business. Below, we’ve compiled our findings to help you identify top areas where your current purchasing system might be falling short and determine how a comprehensive, software-driven purchasing platform can plug the holes and turn purchasing operations into a strategic advantage.
If you’re just starting to get your business off the ground, or interested in learning more about how to centralize your company's purchasing and payments, we would love to chat.
1. Maverick spend and a lack of formal purchasing process
Maverick spend, or any company purchase made outside of a formal purchasing process, is a leading culprit of wasted cash in purchasing. The goods and services bought through maverick spend aren’t necessarily a problem, but the process always is.
19% of employee spend is fraudulent.
As we illustrated in the examples above, maverick spend starts with that lack of a formal purchasing process. A recent Hackett Group study found that around half of all companies had no formal purchasing system for their employees to buy supplies and services. Without a formal system in place, employees don’t have to seek approval for purchases, purchases aren’t tracked, and budgets aren’t enforced.
Cozen O’Connor, a large law firm with 29 offices around the world, ran into this exact problem. Its 400+ employees were making office-supply purchases as needed, without any formal purchasing process or tracking system in place. With buying decisions distributed across the employee base, the firm had no ability to analyze spend per product, location, or category.
But within 24 hours of implementing software to track and manage spend, the firm identified savings opportunities of 10%. Compared with its maverick spend days, the firm is now saving $5,000-$6,000 per month on products alone.
The solution to maverick spend starts with a robust purchasing process. Your purchasing platform should include a single, centralized catalog, and each purchase must flow through that platform. Employees shouldn’t be allowed to make purchases outside of the system. The end of maverick spend starts with you helping employees make purchases the right way.
5 Ways Your Purchasing Process Is Leaking Cash, (and How to Fix It)
Turn your purchasing process into a competitive advantage with this guide. Identify key areas to watch for improved efficiency and savings.
2. Weak oversight of vendor performance
When you think about the historical approach to business purchases, you likely include items such as quotes, purchase orders, order confirmations, invoices, and receipts.
Thankfully, this document-intensive back-and-forth has now moved mostly to a digital format. But that hasn’t cut back on the number of required documents. QX Software Services found that a business purchase creates (on average) five to seven documents.
If you don’t keep up with these documents and ensure that they’re accurate, they’re useless. In fact, the very documents meant to protect your business can become the bane of your purchasing process and lead to wasted time, overspend, and more leaking cash.
An effective purchasing system consolidates the entire process into a single platform. From quote to invoice, every purchase is approved, recorded, tracked, and paid in the same system. The QX Software study we previously mentioned found that implementing a purchasing system can reduce costs by up to 50%.
From a documentation standpoint, San Francisco-based catering company ZeroCater reduced the number of invoices generated “from 200 invoices a month to maybe 3 or 4” with such a system. This one change cut down on the many tedious hours spent reviewing invoices while creating a more efficient system in the process.
3. Missing budget controls
Budgets are a given in the business world. Your employees expect them. You count on them as a road map for the next month, quarter, or year. It’s unfortunate that this budget-guided mentality doesn’t always make its way into the purchasing process at many companies.
A McKinsey study found companies that don’t actively control their tail spend with budget controls miss out on savings between 5% and 15%. Purchasing is a key budget item. Likewise, budget controls should be a key element in your purchasing system. Integrate budget controls into your purchasing process with software that can enforce preset rules. These rules often establish limits for spend by employee and department. You can also set spending caps for specific vendors and categories.
MINISO USA, a Japan-based designer brand, struggled to know how much of the overall budget their departments were spending since there was no spend visibility. Through a single purchasing platform, the company set budget limits for each of their stores that were all easily visible in the purchasing dashboard.
As a result, the operations team can now see the amounts being spent by department, control the overall budget, and have a solid answer for accounting every month.
5 Ways Your Purchasing Process Is Leaking Cash, (and How to Fix It)
Turn your purchasing process into a competitive advantage with this guide. Identify key areas to watch for improved efficiency and savings.
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4. Accidental orders
Whether it’s incorrect quantities, wrong part numbers, duplicate orders, or some other error, accidental orders remain a common purchasing mistake. It may sound odd that a software platform can prevent typos in the purchasing process or eliminate duplicate magazine subscriptions for a single waiting room, but it can.
Any worthwhile purchasing process will automate checks and balances. You should be able to set up hierarchies of purchasing approvals. Let’s say you want your IT department to approve every department-related purchase. Employees should shop for every IT purchase, from mobile apps to new computers, through a single catalog.
Then, each purchase request should be funneled to the IT department for approval. Maybe you want to set up different thresholds within this IT approval process (e.g., an IT manager can approve purchases under $100, whereas IT purchases $100+ require approval from the VP of IT). Your system should allow this as well.
That same system should also allow you to audit purchases to check for errors, such as duplicate orders or overcharging. If your platform does nothing but eliminate accidental orders, you’ll have bested one of the most common culprits of wasted money in purchasing.
Be Relax, a global spa with 40 locations across 11 countries, adopted a software platform to bring control to a chaotic purchasing process. Before implementing the platform, managers bought supplies as needed and used company credit cards for purchases above a certain dollar amount. The company couldn’t enforce budgets, approve or deny purchase requests, or implement spending policies per location. Now, the platform enforces programmatic rules to ensure that each location stays within budget, purchases from approved vendors, and doesn’t place orders for unapproved items. It’s now impossible to make a non-compliant purchase.
5. Manual processes
A BCG study found that nine out of the top 20 Fortune 500 companies listed digital technologies as a critical element of their purchasing process. That’s because digital purchasing systems eliminate many problems that can arise from manual processes.
Manual processes are error-prone, time-consuming, and difficult to repeat. If you want to scale your business, your purchasing process must scale, too.
Digital purchasing platforms eliminate problems caused by manual purchasing processes. Human error is replaced with rules-based, automated systems. Time spent calling vendors, tracking down approvers, and gathering receipts is unnecessary when all purchasing is consolidated in a single, end-to-end system. And instead of following a different ordering procedure for every unique supplier, a single platform means a single, repeatable purchasing process.
Zenergy, a cycling workout company, was looking to scale its business, and manual processes were holding it back. When it ditched pen-and-paper purchasing and switched to a software-based solution, Zenergy reduced its purchasing time from 8 hours to 20 minutes.
Zenergy founder and CEO Nick Staples recalls: “It was nearly impossible to keep up with the growth we [had] planned, and the status quo wasn’t feasible.” By removing manual processes, Zenergy was able to expand from 4 locations to 19—an impossibility without an effective purchasing platform.
Could purchasing be your secret weapon?
For businesses reopening in the wake of COVID-19, a purchasing platform should be a top priority.
[solidcore] is a health and wellness company that recently scaled from 25 to 50 locations. To double its footprint, regional manager Artemis Benedetti recalled that a streamlined purchasing platform was necessary.
[Purchasing] was a mess. We had multiple user accounts on Amazon and also used Wayfair and many third party vendors for wipes, cubbies, etc. We were logging into accounts one at a time, shared logins, and had issues with passwords. . . . Without . . . consolidated ordering we wouldn’t have been able to open the number of studios we have today.
Stop thinking of purchasing as an unwelcome overhead expense, and adopt a platform that will propel your business to the next level.
If you're ready to plug your leaky cash flow with a new purchasing platform, sign up for an Order.co demo today.
Get started
Schedule a demo to see how Order.co can simplify buying for your business.
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When your business is in growth mode, it feels like you’re operating at full throttle. Amid the daily hustle and bustle, you may be making a very common mistake: failing to develop an internal structure around these processes. Especially when it comes to what you and your colleagues are buying on a day-to-day basis, you need a reliable system to keep things organized!
Until then, you may not even be aware of some inefficiencies. So many businesses have linked their vendor accounts to Order.co just to discover that they’ve been buying slightly different versions of the same products at various price points. Before even placing an order through the Order.co platform, they immediately cut costs simply by removing these duplicates!
These situations are completely understandable for any company, particularly those scaling. The key is to implement a solution that provides an inherent structure while offering customizable features tailored to your business's core needs.
Impose order upon chaos
Furnished housing provider Zeus Living, for example, was coming up with several methods for turning a “very chaotic” purchasing process into a well-oiled machine. “The ordering system,” recalls Procurement Manager Elizabeth Kisch, “was essentially waiting until we ran low on a quantity of something, and a manager asking for the order, and then myself relaying the order information to the warehouse manager.”
Now, the Order.co platform allows Elizabeth to give the task of ordering to the warehouse managers without much additional explanation. “It makes me feel good,” she says, “that someone has a handle on things that doesn’t require me checking in every single day.”
5 Ways Your Purchasing Process Is Leaking Cash, (and How to Fix It)
Find 15 must-ask questions to narrow down your software search and make your research process MUCH easier.
Make scaling quick and painless
On top of simply providing a standardized process around purchasing, Order.co also made the addition of new locations and employees a matter of a few keystrokes, while mitigating all the extra processing time you’d think those additions would require.
In fact, for Zeus, Order.co’s ability to execute orders automatically across any vendor drastically sped up the process, which used to take five to seven hours from receiving the initial request internally through placement, tracking delivery, and payment. Now, a multi-vendor order placed via the cart takes Zeus less than one hour.
Customize features
To customize the platform to her company’s specific ordering needs, Elizabeth wisely takes advantage of an Order.co feature called Product Lists. These offer a way to build customized shopping lists for new location openings, company parties, weekly breakfast supplies, new employee onboardings, favorite products, or monthly snacks — you name it! In one click, you can put a pre-set list of products and quantities into your cart.
Want to see any of this in practice? Book a demo today!
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Schedule a demo to see how Order.co can simplify buying for your business.
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32 years ago, a small software company released what is now the cornerstone of both mom and pop shops and Fortune 500 companies alike. That’s right, I’m talking about Microsoft Excel.
With the advent of PayPal in 1998 and Amazon Prime in 2005, the eCommerce world took a quantum leap into the future for personal purchasing, yet the older enterprise systems for purchasing, budgeting, and spend tracking all relied on a platform as old as Garfield for any real analysis. This had us asking ourselves, “Where’s the beef?” Surprise: there was none, and in 2014, our co-founders set out to change all that. In doing so, our company has laid out the six best ways your business can save money on purchasing while using Order.co or any other system.
Centralize it
Far too often, companies are stuck in a “wild west” mentality of purchasing. There are no set parameters for who can purchase which items, who can approve those purchases, what the budget and line item restrictions are, etc. Spend analysis and budgeting is often done retroactively at the end of a payment cycle by vendor, where departments or locations are asked why a specific anomaly occurred. Adopt a system that allows you to manage all this at once: the more automation and guidance provided for purchasers the better. In bringing spending under one roof you will also start to be able to make actionable decisions off your data.
Train your team
The key to healthy spending across departments and locations is to ensure that everyone is on the same page. When selecting a purchasing system make sure that it is easy to use for everyone who would be placing an order: it should be familiar, intuitive, and convenient so people want to use it instead of feeling compelled to. Then give training collateral or sessions to the necessary team members to ensure that the platform and processes are properly understood.
If possible, lean on your purchasing platform for help! For example, Order.co account managers and customer success teams ensure that you and your team are fully comfortable with our platform and are able to squeeze every ounce of value out of it by giving customized walkthroughs and webinars whenever needed.
5 Ways Your Purchasing Process Is Leaking Cash, (and How to Fix It)
Turn your purchasing process into a competitive advantage with this guide. Identify key areas to watch for improved efficiency and savings.
Maintain a database of the items you are purchasing
It is important to be able to standardize your data across vendors. Goods like paper towels could be ordered from different vendors under slightly different product names or SKUs at different prices. Establish a system whereby you can measure at the line level spending across vendor, user, location, geography, or whichever breakdown makes the most sense for your business.
Set a budget and stick with it!
Often times it’s difficult for finance to have clear oversight of budgeting. Charges roll in at the end of the month when the toothpaste is already out of the tube and the fateful words “you went over the budget!” are often heard too little, too late. As a result, financial prudence becomes tougher and tougher as a business grows.
Set your employees up for success with a pre-established budget and a system for everyone to easily track themselves. On Order.co, we find that over 90% of our clients’ users stay within budget just because they have a way to easily see in real-time how much they are spending within that period.
Leverage your buying power
While appropriately managed spend data is a prerequisite, it is important to take the next step and leverage your business’ buying power to drive better prices through your vendors. Create reports to identify your top SKUs and develop relationships with your vendors whereby you can drive better pricing based on increasing volume.
For long-tail spending or any situation where your purchasing team might not have time to negotiate and re-negotiate, implement a platform like Order.co that can manage your strategic sourcing for you. Order.co brings a world-class array of partner vendors to our customers, allowing them to see exclusive line item savings that otherwise simply could not exist for an individual business.
Be transparent
Spreadsheets, PO’s, clunky ERP’s, and a myriad of invoices all lead to one thing: a lack of transparency. Spend transparency at every level encourages an environment of responsible spending instead of making it a “gotcha” for management to enforce after the fact. Your users and locations will be empowered by a system or process that shows them their budget, spend, and impact on the company as they place their regular orders each day.
Like any good relationship, success in purchasing relies on unity, communication, and the help of others. Order.co delivers the customizable and adaptable capabilities that today’s fast-paced environment demands, all while giving power to the purchaser and control to the C-Suite. You can find out more by requesting a demo.
Get started
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