The Challenges That Come With P2P Processes And How to Tackle Them With Automation

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Procure-to-pay (P2P) integrates the procurement and accounts payable operations of a firm. As soon as the need for goods or services arises, the process begins

Although implementing a procure-to-pay solution in your company may provide a plethora of advantages, including time, money, savings, transparency, and efficiency, it also comes with its set of procurement challenges. 

Common Procure to Pay Challenges

The issues begin when the procurement team spends too much time on low-value tasks such as frantically entering invoices into the ERP system, tracking down required signatures for payment clearance, and collecting paper documents from filing cabinets. 

While this paper chase was formerly allowed, today’s firms can no longer afford to miss out on savings or jeopardize their credit ratings or regulatory compliance. Here are some common procure-to-pay challenges a company might face:

1. Invoice Processing Errors 

Manual entries, processing, and sign-off procedures slow down the P2P cycle, resulting in high turnaround time for invoice approvals, late payment penalties, and potentially jeopardizing your supplier relationships. In addition, any system requiring paper and human data entry carry the risk of error. Resolving the error leads to increased cost per invoice and reduced staff productivity. 

2. Adhering to Policy Compliance and Governance

Management of numerous purchasing channels and their regulation becomes inflexible during P2P processes. The basic process of expenditure pre-approval is sometimes regarded as unnecessary bureaucracy, resulting in non-contracted spending and improvised purchases. 

3. Unifying Systems and Processes

Departments within an organization have their own buying processes and tools which makes it difficult to have complete visibility on spend which eventually leads to overspending. With no clear visibility on who is spending on what, the procurement process no longer stays transparent.  

Companies also frequently store data in multiple physical locations, making it difficult to have a reliable, single, integrated supplier and business data source which makes it difficult to timely retrieve required data, especially during audits. 

Moreover, teams working in silos and having no cross-departmental collaboration results in data silos. Since there is no sharing of data, the process becomes inefficient and prone to errors & costs companies a huge amount of money. 

4. Supplier Management 

Supplier management is one of the most challenging aspects of procurement. In human-led onboarding, shortlisting suppliers can become tricky due to lack of information. In addition, buyers lack the strategic vision required to use new vendor management systems for multi-product and large-volume orders.

Organizations often damage their relationship with profitable suppliers by not addressing their payment queries timely. Without a proper tracking and feedback system, payments get delayed in approval processes and suppliers move on to the next buyer, costing a huge amount of loss.

How Automation Can Solve Procure-to-Pay Challenges 

Automation can solve your procure-to-pay challenges and make your processes efficient in the following ways:

  • By adopting procurement automation software, organizations can eliminate manual routing and processing which wastes a lot of useful resources including labour and time. 
  • When manual and error-prone processes are replaced by automation, it reduces the chances of mistakes, thus bringing in more efficiency and accuracy into the process.
  • Through automation, the time it takes to acquire an ordered product, i.e. purchase order cycle can be greatly reduced. Not only can organizations obtain products for important projects sooner, but it can also improve invoice-to-pay efficiency.
  • With the help of automation software, organizations can assign any approval to the next individual or department while keeping track of its journey. Constant reminders and emails ensure that the responsible person has a specific deadline for approval. 
  • It also creates visibility within the organization that highlights where the approval process is stuck. This enables a low turnaround time for approvals and keeps the P2P process faster while digitizing and unifying the whole process across the various departments. 
  • Digital procurement generated invoice processing software automatically can have several built-in checks to point out mistakes. This in turn eliminates high-resolution costs and saves valuable time for the parties involved as well. 
  • Modern procurement software can also adapt to unique purchasing standards and corporate rules. With the compliance process automation, organizations can make sure that supplier meets all the standards and clauses of the legal documents. 
  • The visibility brought in by P2P softwares, helps monitor non-contracted purchases, and eventually ensures that all employees in the organization adhere to the compliance policies and standards set by the procurement team. 
  • All the contracts, invoice and other documents can be made available to a supplier at a single click. Likewise, you can have all the supplier information at your fingertips as well which will help you take strategic decisions 
  • Furthermore, suppliers can view or update purchase orders, prices and their own details remotely. This can enable coordination between the departments and suppliers
  • Shared calendars and transparent procedures help to identify bottlenecks and get things going again. With timely PO generation and processing payments with the help of automation, an organization can maintain a healthy relationship with its suppliers.

In a nutshell, organizations should adopt automation throughout the procure-to-pay cycle that can help them decrease their operating expenses while also enhancing the efficiency of the whole procurement process.

About Author

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Mohammed Kafil is a certified procurement consultant who has been coaching companies to establish resilient digital procurement operating models for over a decade now. With Kissflow Procurement Cloud, a flexible procurement software that streamlines end-to-end procure-to-pay, and also eventually the vendor management process, Kafil helps medium and large enterprises with their digital transformation projects. In the recent past, he has also worked with Fortune 500 companies to implement platforms like Coupa, Ariba, Ivalua, and BuyerQuest.

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