Here Are 10 Reasons Why You Should Automate the P2P Function

The procure-to-pay (or purchase-to-pay) function is a critical component for the success of any business. With finance departments constantly on the move to revamp and optimize processes in today’s new normal, it’s vital that they focus on boosting the efficiency of mission critical functions like procure-to-pay (P2P).

Automation has been the buzzword for businesses across the globe. It is an effective and efficient way to not only improve various finance functions but also to achieve a stronger ROI. The P2P function can benefit significantly from automation as it increases accuracy, efficiency, control, and profitability.

Brief Overview of P2P (Procure-to-Pay) Process

The Procure-to-Pay (P2P) process is all about how a business handles its purchases from start to finish. It starts when a company decides it needs something—be it materials or services—and continues through placing orders, getting the goods, and paying the bills. This process isn’t just about buying; it’s about coordinating between different teams like procurement, accounts payable, and receiving to ensure everything runs smoothly.

Managing P2P effectively helps keep supplier relationships strong, controls spending, and helps with cash flow, which is crucial for maintaining a healthy business budget and planning finances accurately.

Importance of P2P (Procure-to-Pay) Function Automation

When you automate the P2P function, things get a lot smoother and more efficient. Imagine cutting down on all the usual errors that come from manually handling data. Automation speeds up the entire cycle, from order to payment, and reduces the paperwork headache. For instance, it can automatically check if the invoices match the purchase orders and receipts, highlight any issues, and ensure that payments are only made when everything checks out. This not only speeds things up but also tightens up your financial controls.

Automating P2P also lets you see what’s happening with your purchases in real-time, which helps manage cash flow better and gives you solid data to negotiate deals with suppliers. Over time, this can save quite a bit of money by avoiding unnecessary payments, grabbing early payment discounts, and cutting down on the costs linked to traditional paper-based processes. Plus, it frees up your team to focus on more important things than paperwork, like strategizing and driving the business forward.

10 Reasons Why You Should Go For Procure to Pay Automation

So, if you’re on the fence about automating the procure-to-pay function, here are 10 reasons why you should make the commitment.

1) Complete visibility

By implementing an automated P2P solution, you’ll gain access to invaluable information about your transaction processes. This will help your business save money, meet business goals, and make process improvements. Furthermore, an automated system is capable of flagging issues related to duplicate requests, outstanding invoices without a corresponding PO, and orders for existing items in inventory.

The automated workflows also make it easier to identify potential bottlenecks, design new process flows, and collate information that can be used to make potential process improvements. Thus, an automated P2P solution offers visibility throughout the supply chain, thereby giving real-time inputs for both buyers and suppliers.

2) Fraud reduction

For businesses across the globe, there is always a risk of fraud while dealing with invoices. A centralized automation process can help reduce fraud risk by drawing hard lines between request, approval, and purchasing powers. This will also make it difficult for scammers to enter the system through fraudulent invoices.

3) Enhanced supply chain management

An automated P2P solution not only manages procurement and financial data, it also creates an entire database of knowledge for vendors. By utilizing a centralized document management system that’s connected to your ERP system, it will be easier to keep track of each vendor’s terms and conditions, current and potential discounts, and overall performance.

Using such data, you can replace underperforming vendors and prioritize long-term, mutually-beneficial relationships with high-performing vendors. Additionally, this information can help with negotiation of contracts that will lead to better terms & conditions and favorable pricing.

4) Lower risk, enhanced compliance

Risk management is crucial for the procure-to-pay function. Automation can reduce and even remove errors, fraud, invisible spends, and sub-optimal supply chain management. It also enables generation of accurate financial reporting documents that come with a fully detailed audit trail for each transaction.

5) Streamline procurement processes

An automated P2P solution can be integrated with your ERP and in turn offers connectivity throughout the entire organization. This will speed up requisition requests & approvals, supplier selections, creating POs, and sharing with vendors – all of this is done electronically and is therefore easily trackable.

6) Lowers invoice processing costs

It’s a known fact that manual processing is expensive. Successful automation, on the other hand, can decrease costs, save time, and improve accuracy.

7) Better management of exceptions

Automating invoice processing will speed up the process, allow correct invoices to go straight through for approvals, and share exceptions with the team for added attention and quicker resolution.

8) Improves supplier relationships

An automated supplier portal will enable suppliers to know when they will receive payment and provide them with necessary information for better decision-making. Furthermore, quicker resolution on invoice exceptions and disputes leads to increased goodwill and can fetch better terms and discounts for buyers.

9) Leverage negotiating power

If your suppliers are confident of getting paid on time, they will be more willing to offer better terms and discounts to buyers, thereby creating a win-win situation for both parties.

10) Capture data for better decision-making

An important benefit of automated P2P systems is the ability to offer robust on-demand reporting capabilities. The real-time and historical data gathered by these systems will enable businesses to gain greater control over their cash flow and working capital.

Are you thinking of automating your procure-to-pay function?

QX can support your P2P automation and transformation initiatives. We offer a wide range of outsourced P2P services for businesses, including accounts payable, invoice management, PO management, P2P reporting, and supplier master management amongst others. Speak with our experts to get a customized P2P solution for your specific organizational needs.

Originally published Aug 26, 2021 10:08:16, updated Feb 06 2025

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