Procurement is a word that puts many businesses in a fix. Entrepreneurs lose their sleep just trying to streamline and bring the procurement process under control. The way a business sources goods and services is still siloed and full of uncertainties. No wonder most enterprises end up running huge procurement costs and delaying their sales cycles. A new way of dealing with procurement is emerging as a top solution to reduce inefficiency and improve transparency. Known as procure-to-pay, the process is the new way to manage procurement.
In this post, we will explore the steps to implement procure-to-pay for your organization for optimum sourcing.
What is Procure-to-Pay?
Procure-to-pay helps businesses procure quickly and efficiently. It calls for integrating purchasing solutions and accounts payable to get full visibility and control on each procurement stage. Many businesses now use procure-to-pay to streamline procurement and reduce costs. It can even ensure timely payments and improve your vendor relationships.
How to Implement Procure-to-Pay
Here are the steps to incorporate procure-to-pay into your procurement process:
The first step of the process is to identify what you need to procure. The job relies on the cooperation of the management and the employees. Your staff from various departments may raise the need for purchasing goods or services to work productively.
The person or department head requesting procurement will create a requisition. It is an official request to source something and can be initiated by any team member.
The purchase department traditionally evaluates each requisition put forward by internal stakeholders.
Issuing Purchase Orders
The purchase department will decide which requisition requests should be approved. The task may need a reference to company policies and purchasing conditions.
After careful evaluation, the purchasing department will approve requisition requests. They will select a supplier and create an official purchase order.
Purchase orders may need approval from top management for legitimacy.
Purchase of Goods
The next step is to receive the goods from your vendor. Your supplier will also send the invoice against your purchase order.
Goods may need physical checking to ensure they are as per specifications.
The next step is to pay your vendor for supplying the goods. You will need to match the invoice and enter the transaction in your accounting system.
Next, we will present a few best practices to improve your procure-to-pay process.
How to Streamline Your Procure-to-Pay Process
Technology is the ideal solution to improve visibility and transparency. You can also automate most of the process and reduce manual work. In addition, you can reduce your procurement costs and even boost your productivity.
Use technology to reduce procurement paperwork. You can use purchase software to create and entertain requisition requests and purchase orders. The process will help you conserve resources and precious human hours.
Approving requisitions can take a long time, especially for big enterprises. They have to deal with countless requisitions daily from different departments. As a result, speeding up approvals can reduce bottlenecks and delays.
Communicate your procurement policy with all stakeholders so that they know what’s allowed. Additionally, route all requisition requests through one central team for quick and legitimate approvals.
Automate Invoice Management
Businesses have to manage a massive volume of invoices from suppliers. They have to match each invoice with the right transaction for bookkeeping. Needless to say, manual processes can take up a long time and delay payments. As a result, your supplier relationships can suffer.
Businesses should look to automate invoice management matching. They can use tools like Mesh Receipt Automation to match receipts with payments automatically.
The process saves productive business hours, times your payments accurately, and helps improve vendor relationships.
Use Digital Resources
Limiting yourself to paper orders and receipts is a sure way to hamper productivity. You should move to new-age resources like e-receipts to enjoy a better procurement experience. Digital receipts can be collected using mobiles or emails and matched easily with the right transactions.
As a result, you can also improve your data accuracy.
The procure-to-pay process can help businesses reduce hiccups in procurement. You can source quickly, pay fast, and enjoy more efficiency. Businesses will also be able to expedite the production cycle and market faster. As a result, procure-to-pay can even improve your bottom line.