Whether you are a sole trader or a multinational corporation, if you are serious about your business, then you should be seeking ways to make it more efficient and cost-effective. This is now easier than ever because of the many digital solutions on the market. One area where these have had a big impact is the procure-to-pay (P2P) process. In this article, we will look at what P2P solutions do and the benefits they can have for your business.
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Understanding P2P Solutions
Procure-to-pay describes the entire process of ordering goods or services for your business. That includes tasks such as creating purchase orders, receiving goods, order matching, and authorising and sending payments. Traditionally, these tasks have been performed manually by a person or department specifically dedicated to them. However, even with staff dedicated to its completion, the manual P2P process is highly inefficient. Errors, unnecessary waiting for approval, and lost paperwork can all slow the process down significantly and disrupt business.
Digital solutions for P2P Futurelog and other brands automate some or all of the steps in this process. Every task is handled on a single integrated platform so that each transaction is accurately recorded, tracked in real time, and visible to anybody who needs to see it. In addition to speeding up the P2P process, many digital solutions generate useful information for businesses by using AI to analyse all the transaction data.
The Components of P2P Systems
Because the procure-to-pay process involves several tasks, all software-based solutions need to have functions that can handle them all. The first thing they will have is e-procurement handling, which is a way of allowing employees to create and submit purchase orders digitally, or at least to request items so that someone can generate the order for them. Next is a supplier management component, which stores the contact details of suppliers and passes orders on.
One of the most important functions of a P2P system is invoice matching, which means checking that the payment requested by a vendor matches the purchase order they were sent. When purchase orders and invoices are all stored in the same system, this can be done almost instantly. Handled manually, it is a slow and error-prone process. The final component is electronic payments handling so that vendors can be paid quickly and securely once their invoices have been matched.
Benefit 1: Cost-Effectiveness
Traditional procurement procedures are not very financially efficient, especially when you consider the possible hidden costs. On top of the salary of the employees who handle the process, you also have administrative expenses resulting from the paperwork involved, which obviously increase when errors are made. Then there is the unlikely, but potentially very costly, risk of procurement fraud or fines for compliance failures. Automated solutions help cut costs in several ways.
Firstly, the purchase of supplies like paper and printer ink are unnecessary when everything can be handled on a computer. And mistakes are not only far less likely this way, but often easy to fix when they do happen. Fraud is much easier to detect and avoid altogether, and other possible hidden costs are easier to avoid too, like late payment penalties. In fact, quicker payments might strengthen your relationship with vendors and help you negotiate lower prices.
Benefit 2: Enhanced Compliance
Paper-based procurement processes give employees a lot of leeway to get around both company procurement policies and statutory regulations. While rare, unauthorised spending or compliance breaches can cost businesses a lot of money if they do happen, and they are risks that should be taken seriously. One of the major benefits of digital P2P systems is that they minimise these risks. For example, their settings can be tailored to only accept purchase orders that comply with company and regulatory guidelines.
They also make audits a breeze compared to trying to follow a literal paper trail, which can be unnecessarily cumbersome. Paperwork can easily be lost, destroyed, or difficult to locate or retrieve. Being able to simply look up all of the information about a transaction on a cloud or hybrid cloud system is much faster and more convenient, and this can benefit both managers looking for information and external auditors should they need to investigate the business.
Benefit 3: Increased Productivity
An automated P2P process will not only save your business money, but time too. A manual process would typically involve someone making a request for something, which would then be passed to whoever creates the purchase orders. If they are busy, this could already take a while. Then, they usually need approval from someone before it can be sent to the vendor. More waiting. And if there is a mistake, it all starts again.
By contrast, a digital solution can store template requests or purchase orders to make filling them out quicker. If compliance issues are detected, it can just refuse to accept them and pass them on for approval. Other types of errors, like the wrong values being entered, can be easily corrected if spotted. Accepted requests can be passed on for approval instantly, and that approval can be given by the simple click of a button.
Choosing a Digital P2P Solution
Every company will have its own needs when it comes to procurement. While solutions for P2P by Futurelog and other developers will all have the functions described earlier, some may be easier to use, integrate with your existing systems, or more secure than others. Investigating these things, as well as the scalability of each solution, is the way that you should approach choosing the best P2P solution.
It is also wise to consider the vendor’s reputation and the level of support that they offer. There will inevitably be a learning curve at the start, so technical support will be important. The same goes for applying automation in other areas, such as fulfilment.
Conclusion
Digital P2P systems offer three of the most attractive business benefits: making things faster, cheaper, and more accurate. Of course, there may be some upfront and ongoing costs to pay, but in most cases, these will be outweighed by the savings they make and the hassle they save your staff. This makes them well worth considering for any business competing in the modern marketplace.
