Procure-to-pay, or P2P, refers to the end-to-end process of sourcing, purchasing, receiving, and paying for goods and services. The process is vital for AP teams as it directly impacts their cash flow management abilities, supplier relationships, and operational efficiency. In this article, we’ll investigate the basics of P2P, the shortcomings of manual invoicing, and how implementing automated invoice processing can streamline your operations.
How P2P Works
Procure to pay (P2P) is a structured process that involves the acquisition of goods or services by a business, followed by the payment to the supplier, and is overseen by the procurement and AP teams, working in tandem.
It begins with the procurement team identifying and selecting vendors, negotiating prices and terms, and creating purchase orders. The goods and services are then received and verified against the purchase order by the receiving team. The invoices are then submitted by the vendor, and the accounts payable team matches them with the purchase order and verifies the pricing and quantities.
Once everything has been approved, payment is made to the vendor. This process is important for streamlining procurement and payment activities, ensuring accuracy, and monitoring expenses.
The Shortcomings Of Manual Invoice Processing
An effective P2P process is characterised by accuracy, short cycle times, optimised costs, and compliance with relevant regulations. However, traditionally, businesses have relied on manual invoicing processes to manage their P2P cycles, which can be time-consuming, error-prone, and labour-intensive.
Some of the most common issues AP departments face with manual invoice processing include:
- Human errors in data entry leading to delays and inaccuracies.
- Difficulty in tracking and managing volumes of email attachments and PDF invoices from suppliers.
- Substantial costs in hiring staff to handle invoice processing tasks.
- Limited visibility and control over the P2P cycle.
- Increased susceptibility to fraud.
The Power Of Automated Invoice Processing
Recognising these drawbacks, many organisations are now shifting towards automated invoice processing software to streamline their P2P operations, reducing the need for manual intervention, improving accuracy, and minimising delays. What capabilities and features should you look for in an automated invoice processing solution?
OCR and ML technology: Advanced technologies like Optical Character Recognition (OCR) and Machine Learning (ML) algorithms can accelerate the data capture process and improve overall efficiency.
Integration and analytics: Look for invoice processing software with real-time analytics, customisable dashboards, and seamless integration with your existing ERP or accounting systems.
Key automation features to look out for: When evaluating an invoice processing/P2P solution, consider automation features like automatic data extraction, compliance checks, invoice approval workflows, and robust reporting capabilities – these can save valuable time and money in the areas that are traditionally most resource-intensive for AP teams.
P2P policies and procedures: Companies should also establish clear written policies and procedures for requisitions, approvals, and invoice processing to ensure consistent and efficient execution of the process.
With the right technologies and processes in place, AP teams can achieve significant cost savings and operational efficiencies in the P2P process, promoting greater accountability and transparency. To find out more about P2P and invoice processing automation, please contact Cogent Consulting today for a live demonstration of our proven system.
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