Posted on August 26, 2021
Written By Rukmani Krishna
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.
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.
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 Dec 08 2021