“How to use procurement automation to save time and money”

“Procure to pay is the process of integrating procurement functions, such as purchase request, vendor identification, ordering and accounts payable systems in order to streamline the process”.

…It exists within the larger procurement management process and involves four key stages: selecting goods and services; enforcing compliance and order; receiving and reconciliation; invoicing and payment.”

Much like many other business operations, the procure to pay process greatly benefits from automating repetitive tasks. Let’s then dive into what procure-to pay is and how automation is changing the way your procurement teams operate.

Procurement Process Workflow

Even though every process and company is different, these are the six steps you’ll likely follow during the procurement process flow.

Procurement Process Workflow

1. Identify your business requirements

This is one of the most collaborative steps in the process. You may require cross-departmental input to ensure you map out high-level specifications. The more detail you identify the faster and better your solution will fit your business needs.

2. Vendor evaluation and selection

The way companies execute this step varies on their procurement process itself.

You may start with the requisition of a new solution, product, etc. and pass it on to the vendor management team. This one may identify whether the company already works with a vendor which provides that solution or not.

Example of a Purchase Requisition form’s initial step automated as part of a procurement process

Purchase Requisition form automation

In this example, the company has automated the purchase requisition process using dynamic forms. Once the responsible person identifies the need, is guided through the process with smart forms that adjust to the answer provided.

Depending on the following steps defined by the company, the information provided is automatically routed to the right department. The person that submitted the request can be updated as new decisions are made along the process.

If the company needs a new vendor, they can invite the selected ones to provide all the information for evaluation and selection. When this process is streamlined the process becomes easier.

They can define the selection criteria and add it to their workflows. After inviting vendors to submit all required documentation, the software can automatically vet them based on the defined criteria. After which passes to the decision maker (if any) for final considerations. This particular point saves a considerable amount of time, specially when dealing with many vendors.

Example of a Vendor Onboarding process’ initial step. It was automated as part of a full macro process involving Vendor Management, Due Diligence and Finance departments

According to how the company designed its process, part of or all the information submitted here is routed to one or more teams. Subsequent workflows start automatically simultaneously or on phases.

3. Purchase requisition

We already discussed this point above. However there is another very helpful and important point you need to know about: Approval Workflows.

4. Purchase order

Companies often rely on their Enterprise Resource Planning (ERP) tool for this step. However, there are some parts of this process that can be too expensive to manage with the ERP. For this reason many companies choose to integrate with other automation tools.

By automating this part of the procurement process you can automatically send, store, track the purchase orders.

5. Process invoices

The vendor will then send you an invoice either via the mail or electronically. It will be verified by the accounts payable (AP) department along with any other required paperwork.

6. Payment

After the invoice is approved by AP, the procure to pay process is finalized when payment is issued to the vendor.

When done manually, following these steps in the procurement cycle entails cross departmental back and forward communication to confirm delivery, tracking invoices and ensuring the purchase order matches the invoice. This isn’t just time consuming for buyers and suppliers, but may be leading to serious error, delays and customer churn.

What is Procure To Pay Automation?

Procure to pay or P2P automation, is the use of process automation technology to streamline tasks, work, processes and payment as part of the full procurement management process.

It’s designed to add efficiency to the processes of vendor evaluation, selection, and payment with the help of technology. Speeding up processing, saving time, improving your monitoring capabilities with real time data and document management.

→ Elimination of manual processes and tasks, automation of document sharing and storing, notifications, requests, etc.

→ Streamlining collaboration between departments and elimination of data silos.

→ Cost savings through increased accuracy, reduced labor, faster  processing and access to information.

Benefits

Benefits and Functions of a Procurement Software

“A procure-to-pay system is a fully integrated solution designed to support an end-to-end process that begins with goods and services requisitioning and ends with ready to pay files for upload into an accounts payable system,” Gartner explains.

Powerful procurement software solutions have functionalities such as:

  • Scan and capture documents
  • Build a supplier portal 
  • Customized approval workflows
  • Match purchase orders to invoices
  • Cloud-based capabilities. 

All these will help you to:

  • Increase process efficiency and reducing clerical errors
  • Allow your vendors to submit and manage invoices electronically
  • Make any approval process significantly faster and overall more efficient
  • Review documents faster
  • Keep all relevant documents in one place; increasing transparency and strengthening supplier relationships

Specialized vs. End-to-End Procurement Automation

Many companies have purchased software to automate purchase orders, invoice payment, and even just one part of the full procurement to pay cycle. So we often come across organizations that have different software for different subprocesses. This is leading to double data entry, miss-matching data, customer frustration and many limitations to communicate across departments.

To avoid this, look to get away from segmented procurement applications that can make an already complex workflow even more intricate.

We recommend to prioritize a software solution that will allow you to streamline the full cycle end to end. All from one single place.

Explore how to automate your full Procurement Process with one single platform

What else to look for?

Before you make a decision, make sure to look for:

» A customizable alternative that you can tailor to your specific process. [ Remember that an integrated tool is always preferred over multiple disparate solutions ]

» A cloud-based tool you can access from anywhere, at any time, from any device. [ It will make easier to keep track of progress and manage the project from any place your team is ]

» A built-in contract management solution. [ It will eliminate the need to send sensitive documents back and forth via email, among other benefits ]

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