The purchase to pay process has many names, including procure to pay and P2P. But do you know what any of it means? In this blog, we’ll take you through the purchase to pay process. Sit back and get ready to learn!
The purchase to pay process might seem overly complicated, but it doesn’t have to be!
We’ve broken it down into six steps:
Typically, the purchase to pay process begins when the buyer establishes a need. This could be any type of goods, product, or service.
Next, a formal request is made. This request will be reviewed by the appropriate person, whether that’s a department head or Procurement Consultant. At this stage of the purchase to pay process, the request will either be approved or denied. If a request is denied, it will be sent back to the initiator for correction and resubmission.
If the request is approved, a purchase order will be submitted to the supplier. The supplier can then either approve it, reject it, or start a negotiation. If a supplier approves the purchase order at this stage, this activates a legally binding contract.
In the case of low-value items or one-off purchases, there could be the option for a spot buy.
At the next stage of the purchase to pay process, the supplier will deliver the requested goods or services. The buyer will then inspect the products or services to ensure they comply with the contract terms. They will check factors such as:
Once the previous stage of the process is complete, the supplier will submit an invoice. Following this, a three-way match between the purchase order, the supplier invoice and the goods/services receipt is performed. This aspect of the purchase to pay process is to identify any discrepancies. If none are found, then the invoice if passed to the relevant team. If discrepancies are found, then the invoice is rejected.
Now it’s time for the invoice to be processed and payment to be made to the supplier.
A major benefit of a purchase to pay system is that it can streamline the procurement process. It eliminates the need for manual processes, which can be incredibly time-consuming. Instead, a fully automated system allows you to capture 100% of your data, in a fraction of the time.
A purchase to pay process also enables you to improve supplier relationships. As the system is automated and, therefore, streamlined, communication with suppliers is simple and efficient. As a result, supplier relationships will improve.
With a purchase to pay process, buyers are able to quickly and efficiently order what they need. Because of this, organisations are able eliminate (or, at least, reduce) tail spending. This is because the systems are easy to use and offer guided purchasing, enabling buyers to stay compliant with policies.
Finally, a purchase to pay system can help to control spending within an organisation. This is because the system provides you with a complete and thorough overview of your data. With this information, it’s easier to control spend, mitigate risk, and conduct effective supply chain management.
At Hudson Procure, our procurement experts have nearly two decades of experience. No matter what kind of support you’re looking for, we can help.
With Procure Consult, we provide support with tender management and ad-hoc procurement consultancy. Our expert team will manage the end-to-end procurement process or can offer assistance at any stage, as and when required.
With Procure Health Check, we’ll conduct a full review of the strategic and operational procurement processes within your organisation. We’ll identify the areas that need improvement and help you drive greater value from the procurement process.
The purpose of Procure Analyse is to conduct a high-level analysis of your spending activity. We’ll help you understand your current purchasing behaviour and highlight areas that can deliver greater value. Procure Analyse is offered as part of Procure Health Check or as a standalone service.
With Procure Outsourcing, we deliver a range of procurement solutions on an outsourced basis, completely bespoke to you. This can range from delivering multiple tender projects as a package to delivering the full procurement function of your organisation.
With Procure Post, you can share your tender on one or more of our 11 sector-specific portals. We’ll advertise your tender to our community of engaged suppliers, looking to deliver similar contracts. This way, you’ll increase your chances of finding the perfect supplier. The best part? Procure Post is completely free with no limitations on the quantity of tenders you can upload.
Get in touch for a consultation and find out how we can help your organisation drive greater value for money.
Check out our other blogs for further Procurement Insights:
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