Keeping Your P2P Cycle Up-to-date
A powerful, effective procure-to-pay (P2P) process cycle is critical for your business. You don’t want to be stuck in the past, using outdated technology. As Forbes Councils Member Peter Nesbitt notes, the way companies spend money has changed dramatically over the past several years. Businesses no longer rely on a top-down model for purchasing and spending. As a result, P2P cycles and technology have changed dramatically.
Is your business up-to-date in its P2P model?
Thanks to next-generation P2P technology, it has become increasingly easy to meet your financial goals and track your spending. Classification and analysis are critical for managing your business’s overall spending and decreasing your costs. Are you ready to streamline your procurement process and master your procure-to-pay cycle?
In this guide, we’ll discuss:
- The components that make up the procure-to-pay process
- How to implement next-generation technology
What Is the Procure-to-Pay Cycle?
The procure-to-pay process includes all the steps necessary to procure, or purchase, the materials and services needed for your business to conduct its usual processes. It includes:
The 7 steps of a P2P Process:
- Identifying needs: In the initial steps of the process, your client will identify specific needs, which you must then meet.
- Requisitioning materials: You then have the opportunity to requisition the materials. The right individuals must sign off and approve that requisition so that you can move forward with the purchase.
- Sourcing the materials: Effective sourcing is critical to ensure that you have a solid supplier who will offer your business the best possible deal on your goods.
- Creating a purchase order: You have the requisition in place. Now, you must create a purchase order and have it approved to meet the client’s needs.
- Receiving the goods: Once the company delivers, you will have the goods in hand to perform the services your client needs.
- Approving the invoice: Your team will approve the invoice based on a three-way match between the purchase order, the vendor invoice, and the goods receipt. The financial team will ensure that no discrepancies exist that could cause problems with the process.
- Paying the vendor: The vendor gets paid for their services, based on the terms of the contract.
What are Best Practices for Your P2P Cycle?
To effectively manage the P2P cycle for your business, you want to be sure that you are implementing best practices. Rather than just checking the boxes and moving forward, ensure that you have the tools on hand to effectively manage your P2P cycle and guarantee satisfaction for all parties involved.
Procure-to-pay software can substantially enhance the effectiveness of your P2P cycle and ensure that you have the right automation and processes in place to meet your overall goals. Does your P2P software integrate with your ERP system? Does it help improve your bottom line and provide you with the data you need at your fingertips? The right solutions, including the ones offered by Order, can help you implement best practices and meet your overall goals.
5 goals to strive towards in your P2P Cycle:
1. Make sure you have high levels of visibility.
Visibility is critical in tracking the success of your procure-to-pay cycle. Order allows you to access real-time analytics related to each user and product. This can help your finance team make critical decisions about your purchases. This next-generation visibility — which keeps up with the latest changes in your inventory, availability, and purchases — can help not just your finance team but also other decision-makers throughout your company.
2. Automate, automate, automate.
Automation has become increasingly common across many industries — and the procure-to-pay cycle is no exception to the need for automation. If you’re looking for a next-generation solution to your procure-to-pay needs, consider the benefits of automation for your system. They can include as much as a 60% increase in productivity and an 83% reduction in purchase order processing time.
Why conduct difficult or time-consuming processes by hand when you can automate those processes and leave time for other things instead? Automation can also improve accuracy and ensure that you have the latest information.
For example, Order’s system doesn’t just automate many of the steps involved in the P2P cycle. It also automates strategic sourcing to ensure that you have the best sources for your high-volume or high-cost goods. Find the best pricing and streamline getting it in front of approvers so that you can quickly move forward with your purchase. This automated sourcing has helped many clients save an average of 8% on their procurement costs. You can also automate:
- The RFQ, or request for quotation, process
- Stakeholder notification
- Many other workflows associated with your P2P processes
Over time, you will streamline your business processes and allow many tasks, from data entry to accounting, to flow more smoothly.
Gain a 60% increase in productivity and an 83% reduction in purchase order processing time
3. Use a system that allows you to manage payments on your terms.
Taking care of vendor payments is a critical part of your P2P process. You want to be sure that you’re able to meet the needs of your vendors and pay on time. This will allow you to continue doing business with them in the future. At the same time, you want to be sure that you’re basing those payments and their timing on the current needs of your business. Order allows you to do exactly that. You have options for how you want to handle your payments.
Do you prefer to consolidate your payments, even handling just a single invoice payment each month? Order makes that possible. Do you want to pay at a specific time, based on your current cash flow needs? Order allows you to schedule payments when they make sense for your business, within the payment terms outlined in your contract.
4. Optimize inventory to the best of your ability.
Your business needs to know what it has on hand at any given moment. Transparency is crucial in maintaining effective ordering processes, tracking inventory, and ensuring that you have the right items coming in at the right times.
An effective P2P process help you optimize inventory. Even better, it can also provide you with more insights into the ideal supplier for your business. Pricing matters, especially for your high-volume orders. So does convenience. Order can streamline ordering so that you can take care of all of it from a single cart, rather than having to check with different vendors to locate your items effectively. This allows you to spend less time worrying about your orders and more time focusing on other elements of your business. But don’t worry — it will still give you the same cost savings you would have if you took the time to shop around on your own. Clear reporting and data transparency will also provide the information needed to keep your accounting system updated.
5. Coordinate and manage delivery schedules.
Delivery schedules, including a system that automates updates to those deliveries, can help you better plan for when you expect your goods to arrive. Has there been an unexpected delay in shipping? Prevent it from having an unnecessary impact on either your bottom line or your business processes by receiving early notification that will allow you to adapt as necessary.
Missing raw materials can also slow down your processes considerably. Your P2P system can provide you with the data you need to track your deliveries so that you aren’t taken by surprise, allowing you to adapt as needed. When you know a delivery is running late, you can change the order of vital tasks, shift materials from another location that doesn’t have such a tight deadline, or make arrangements for another delivery. But if you don’t have that vital information on hand, you may find your business struggling to adapt.
How to Leverage Technology for a Streamlined P2P Cycle
Over the past several years, many industries have undergone substantial digital transformations. P2P cycle technology is no exception. It offers incredible solutions for finance, operations, business leads, and overall spend management. Through effective P2P technology, you can get a better look at your procurement, your accounts payable, and your delivery. You can see where you have shortfalls in your delivery processes or find better procurement options that will help you save money. Even better, you can improve your time management to decrease internal costs and inefficiencies. Your business needs next-generation P2P technology to help you meet your goals. Schedule a demo with Order today to learn more about the solutions we can offer.