In any business, procurement and accounts payable activities are inevitably linked. Making both activities efficient will result in clear benefits to the complete procure-to-pay process, from the procurement function to accounts payable. One of the best ways to make the process efficient and achieve the most benefits is to automate the procure-to-pay activities. An automated procure-to-pay system allows procurement professionals across the globe to communicate information simply and efficiently, streamlining the global procurement process. This reduces time and costs without compromising standards and quality.
Here, we list a few benefits of automating the procure-to-pay process using an e-procurement system.
Eliminates Time-Consuming Manual Steps
One of the main causes of delays in the procurement process is the purchase order approval process. Getting approval for a series of equipment purchases through the manual process requires a document to be uploaded, attached, emailed, downloaded, printed, signed, scanned, attached and emailed back. Even if your company has been able to eliminate some of these inefficient steps, such as adding an e-signing application, chances are there still some areas of the process that could be streamlined and automated. Automation can provide proactive alerts to inform key players of pending actions, importantly eliminating queues.
Reduces the Cost of Goods
An automated P2P process gives organizations certain assurances about the supplier source, pricing, and decision-making processes involved in the purchase, in addition to service level agreements. By directing spend to preferred suppliers, companies might also benefit from better tier pricing. If goods and prices can be found quickly and easily in a similar fashion to how buyers do their online shopping, they will be more inclined to use the system, rather than to go outside the solution with other non-preferred suppliers.
Superior Spend Management
A networked P2P system allows companies to analyze their entire volume of invoice data, to gain visibility into business spending, goals and objectives, negotiated savings, and the procurement department’s financial impact. Organizations can achieve a far more accurate snapshot of their financial standing through the comprehensive reporting of all purchase commitments, and better visibility into accruals. The insights obtained from an automated system can be leveraged to make recommendations about arrangements and practices with specific suppliers, which can enhance supplier contracts, thus finding opportunities for savings.
Applying spend category mapping against GL data offers insights into purchasing behavior on a category and cost-center basis. With an online system, organizations also can be sure that negotiated prices are correctly applied, invoices are accurate, and the right amount of products was received.
Reduction of excess inventory by suppliers for a limited time can easily be applied to the dynamic nature of online pricing – organizations can take advantage of significant savings by purchasing at the right time. Procurement professionals can closely watch market trends, and set up alerts to highlight significant changes. The quicker invoice cycle times offered by an automated P2P solution opens the door for businesses to capture particularly more early-payment discounts.
Efficient Financial Processes
The automated software makes it easy for suppliers to submit invoices electronically. Increasing the proportion of electronic invoices results higher accounts payable productivity. This happens through automated matching of invoices with receipts and POs, direct posting of matched invoices, fewer supplier inquiries regarding invoice or payment status, and faster cycle times. The solution also frees procurement staff from manual invoice handling processes, allowing them to focus on value-added activities such as resolutions, data analysis, and process optimization. The P2P solution provides businesses with uniform invoicing and procurement practices across a global shared services organization, which is essential for becoming best-in-class.
E-catalogs have enabled businesses to market their product offers electronically. This has been a great marketing tool for sellers and buyers, there is price transparency and buyers can compare offers from various e-catalog vendors.
Improves Collaboration between AP and Procurement
The automated P2P process facilitates collaboration across accounts payable (AP) and procurement teams. The lack of collaboration between AP and procurement results in higher purchasing costs invoice processing errors, low spending visibility and management. Better collaboration between AP and procurement offers complete and detailed insights into compliant purchasing, budget variances and order cycle times. All of this help organizations manage spending, reduce the cost of products, drive contract compliance, and achieve competitive advantage. The collaboration provided by an automated system helps optimize processes, improve matching levels, and provide the insights required for effective decision-making.
Simple Configuration and Scalability
E-procurement systems can be configured to suit the unique needs of your organization, and can grow with the business as is needed. Since the software is cloud-based, it supplies significant relief to internal IT and infrastructure teams, as updates and maintenance are handled by the software provider.
Procurement automating has become a necessity; it transforms the way you do business. If you want to stay competitive in today’s business environment, your procurement process must not be merely transactional, but strategic. By freeing procurement professionals from low-value tasks, they can focus on more strategic corporate activities required to achieve your vision.
Kevin Peterson is a content marketing enthusiast, freelance writer at SutiSoft, specializing in Business, ERP, Technology and Cloud/SaaS trends.