Organisations today operate in an extremely complex business environment where they are under constant pressure to streamline their procurement processes. But the process of going from recognising a need to actually paying for a purchase is complicated by numerous steps and stakeholders, as well as potential bottlenecks that can reduce efficiency and raise costs.
Procure to pay solutions have proven to be vital in this area of business transformation. These integrated systems bridge the gap between procurement and accounts payable departments, enabling a seamless flow of information that automates many of the manual processes involved, minimising errors and offering vital insights into spending that can help drive better business decisions.
Understanding the Procure to Pay Cycle
The procure to pay cycle comprises several distinct stages that represent an ongoing cycle of activity. Starting with purchase requisitions, and then flowing to the creation of purchase orders, goods receipts, invoice processing and payment authorisation, each stage relies on the information defined in the prior steps.
These stages are often siloed without adequate systems in place, resulting in duplication of efforts and gaps in information. Staff can end up wasting valuable time chasing approvals, reconciling discrepancies, or entering data across multiple systems. Not only do these inefficiencies slow operations, they also risk payment errors.
Modern solutions address these challenges by creating digital workflows that maintain data integrity throughout the entire process. By establishing a single source of truth for procurement information, these systems eliminate many common problems that plague traditional purchasing approaches.
Key Benefits of Digital Procurement Solutions
Enhanced Visibility and Control
Digital procurement platforms enable holistic visibility into spending trends across the enterprise. Intuitive and user friendly dashboards make it easy for managers to track purchase requests, process approvals, configure open orders, and pay statuses, even by exception.
This transparency can also help prevent purchases from happening outside of your established procurement processes. Staff who are aware that management has visibility on their purchasing behaviour are less likely to engage in maverick spend, circumventing established processes and controls, and will instead follow approved processes.
Streamlined Approval Workflows
Manual approval processes often create significant delays in procurement. Purchase requests may sit in email inboxes for days, and approvers may lack the context needed to make informed decisions. These delays frustrate internal customers and can damage supplier relationships.
Digital solutions implement configurable approval workflows that automatically route requests to the appropriate decision-makers based on factors like department, amount, or category. Mobile approvals allow managers to review and authorise purchases from anywhere, preventing bottlenecks during busy periods or when key personnel are away from their desks.
Automated Invoice Processing
Invoice processing represents one of the most labour-intensive aspects of traditional procurement. Staff must manually match invoices against purchase orders and receiving documents, a process prone to errors and delays that can result in missed discounts or strained supplier relationships.
Intelligent procure to pay systems use machine learning and optical character recognition to read invoices and pull key data without human intervention. Such tools compare invoices to their related purchase orders and goods receipts before parsing exceptions that can’t be resolved by the machine, and automatically processing exceptions outside of this sole workflow.
Implementation Considerations
Process Mapping and Standardisation
This means organisations must map existing processes — before adopting new procurement technology — to see where the inefficiencies lie and how they can be improved. This Modeler’s exercise frequently exposes steps in the process that are extraneous and can be eliminated or standardised to deliver the same result with greater consistency.
Standardisation creates a foundation for successful automation by establishing clear rules and expectations for how procurement should function. Without this groundwork, organisations risk simply digitising inefficient processes rather than truly transforming their procurement function.
Integration Requirements
However, to gain the maximum benefit from them, procurement solutions should easily integrate with the old systems — enterprise resource planning (ERP) platform, accounting software, and inventory management tools. These integrations ensure data passes seamlessly from one system to the next without requiring any manual input.
The best implementations establish bidirectional data flows, keeping information synchronised throughout the technology ecosystem. By integrating procurement with core financials, this eliminates the data silos and offers a unified view of all procurement activities irrespective of the system, the user is making use of.
Change Management Strategy
Part of the transformation journey is the implementation of technology. In addition, organisations will need to implement a holistic change management strategy to aid staff adjustment to new processes and systems. Develop a comprehensive strategy for implementing change that includes education, transparent communication, and continuous support.
Ultimately, user adoption dictates whether any procurement project is successful. Staff are more eager to embrace change and less likely to fight it when they truly understand how this new way of working benefits them personally — by cutting out parts of their job that are considered dreadful, or by eliminating complex processes from their day-to-day work.
Measuring Success
Organisations must set out clearly defined metrics to measure the impact of their procurement transformation. Common KPIs include processing cycle times, proportion of electronic invoices, early payment discount capture rate, and procurement team productivity.
Connecting these metrics regularly leads to the discovery of areas to optimise, but also demonstrates the return on investment of procurement technology. These metrics are also useful for sustaining momentum, both through demonstrating wins and sustaining a growing confidence in the new approach.
Conclusion
There are many areas of improvement for digital transformation within the requisition to pay process. Organisations can remove manual activities, streamline spending visibility, improve relations with suppliers and refocus procurement people towards activities delivering more value to the organisation by taking on the right procure to pay solution.