Procure to Pay process comprises multiple steps such as requirement planning, quotation requesting, vendor selection based on prices, creation of purchase order, evaluation of received goods, multiple quality checks, and invoice payment. The cycle of Procure of Pay consist of the following aspects:
Purchase Requisition: Procurement requests list the required commodities and services by the organization. The procurement requests require approval from the management before it is sent to the procurement team.
Purchase Orders: The procurement team evaluates and lists the suppliers that can best fulfill the organizational needs from their predefined database. In this regard, multiple emails are sent, and outbound calls are made for creating purchasing orders. With dispersed suppliers’ information, the procurement teams take a lot of time to close any order.
Receipt of Goods: After completion of purchase orders, the suppliers send invoices of relatives commodities and services they can provide to fulfill purchase orders along with the prices they are offering. Invoicing: After confirmation of shipment, invoices receipt is provided to the seller
Invoice Approval: Sent invoices are evaluated for authorization.
Payment: After all these steps, payment is made.
The key benefits of Procure to Pay process are as follows:
- Streamlined process of the procurement: Procurement software provides necessary connectivity among all the processes throughout the procurement process. This helps the organization in faster requisition requests and getting a quicker approval for sourcing material from appropriate suppliers based on available data. Additionally, purchase orders are produced and sent to the suppliers electronically, so they’re easily trackable and highly efficient.
- Reduction in processing cost for invoices: Procure to Pay processes ensures paperless working, which will help your organization save time and cost. Additionally, it will allow your organizational employees to optimize strategic initiatives with automation rather than being subjective to repetitive manual processes. Furthermore, the Procure to Pay software will provide your organization with the tools to conduct breakout analysis and spend analysis across multiple categories of products and services so that budgets and savings can be tracked in real-time. This practice will help the organization in controlling the automated approvals.
- High level of transparency: With an efficient Procure to Pay software, your organization can attain a high level of transparency concerning the overall supply chain. This practice will also allow your suppliers, along with you, to view the status of the invoice and raise queries or disparities for resolving issues in real-time.
- Digitalization of contract management: It is general practice in every industry that the organizations tend to purchase specific commodities from preferable and existing suppliers as they know the quality of products and services the suppliers offer. However, it can be highly cumbersome to access and evaluate the products and services provided by the existing suppliers in the past. In this regard, the automation tools of Procure to Pay solution can help your organization manage past, present, and future purchases using a digital repository, which will ease the process of tracking the products and services provided by the suppliers in the past to order in future.
- Better realization of managerial expectations: With the Procure to Pay process, almost all invoices are processed instantaneously throughout the organizational hierarchy. In addition to this, the invoices that are not processed instantaneously can be evaluated by the concerned department and personnel in real-time so that the encountered issues can be resolved quickly and invoices are processed accordingly.
- Improved relationships with suppliers: By adequate utilization of the supplier portal provided by Procure to Pay solution, suppliers can also get understanding and knowledge about the status of their payment and other aspects. This helps the suppliers in improving their decision-making process and strategizing accordingly. Additionally, with quick resolution concerning the exceptional invoices that were not processed instantaneously due to disputes, suppliers tend to develop trust in the organization. Overall, buyers and suppliers tend to develop cordial relationships with each other with the visibility, accessibility, and resources provided to them by the Procure to Pay solution.
- The increased power of negotiation: With a high level of suppliers in your organization due to assurance of payment and access to payment status, the suppliers will offer greater benefits to your organization which will not only improve your competitive advantage level but also increase the volume of profitability. The practice of offering benefits to your organization will also ensure that your suppliers have definite sources of revenue in your organization. Thus, your organization will gain the leverage and negotiation power over suppliers, and suppliers will be willingly accepting your conditions.
- Better decision-making with informed insights: With a robust Procure to Pay solution, your organization will gain on-demand reporting capabilities. Additionally, real-time reporting and historical data are provided by the Procure to Pay solutions which can be used by organizations to gain greater control over their working capital and cash flows. Overall, all Procure to Pay solutions would help your organization in making better decisions with the help of informed insights.
In this regard, your organization should invest in Procure to Pay solutions as it will provide you with the necessary support in optimization of data, creating informed insights based on historical trends, and conducting efficient analysis of the suppliers’ bases. Multiple other benefits of the Procure to Pay solutions are listed above, which promote the adoption of said technology in modern times.