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Siloed, fragmented procurement software complicates the procure-to-pay process. Outdated procurement solutions are expensive,
inflexible, and inefficient. Still, most organizations continue to ‘make do’ with their old-fashioned procurement software.
According to a Paystream 2018 Procurement Insights report, 80% of organizations still use manual or semi-digital tools to manage
their procure-to-pay cycle. Most organizations are using the procurement module integrated with their ERP or accounting software. This
is similar to using a flashlight to crack a nut. Although it gets the work done, it is still not the right tool.
Before long, this misapplication will stir up trouble. The consequences of using archaic procure-to-pay software, or worse, no solution at
all, will ultimately damage an organization’s bottom line. In order to survive the competition, organizations need to move away from
Here’s all you need to know about choosing the right procure-to-pay solution, to make your procure-to-pay process truly effective.
manner at a reasonable price. It involves a number of sequential stages, ranging from need identification to invoice approval and vendor
procure-to-pay process. Here are nine logical steps of an ideal procure-to-pay cycle.
Step 1: Identify needs
The first step of a procure-to-pay process is to determine and define the business requirements with the help of cross-functional
stakeholders. Once a valid need is identified, procurement teams sketch out high-level specifications for goods/products and terms of
requisition form after ensuring that all necessary administrative requirements are met. Requisitions can be created for any type of
a purchase requisition after evaluating the need, verifying the available budget, and validating the purchase requisition form. Incomplete
purchase requisitions are rejected back to the initiator for correction and resubmission.
commodities, then a spot buy can be performed. Else, purchase orders are created from approved purchase requisitions.
are then dispatched to vendors. After reviewing the purchase order vendors can either approve, reject, or start a negotiation. When an
with the contract terms. The goods receipt is then approved or rejected based on the standards specified in the purchasing contract or
purchase order.
delivery, service, contract compliance, responsiveness, and Total Cost of Ownership (TCO). Non-performance is flagged in existing
If there are no discrepancies found, the invoice is approved and forwarded to the finance team for payment disbursement. In the case of
inaccuracies, the invoice is rejected back to the vendor with a reason for rejection.
Step 9: Vendor payment
Upon receiving an approved invoice, the finance team will process payments according to the contract terms. Any contract changes or
reviews liquidated financial security will be taken into account. A payment made to a supplier will fall into one of the following five