Explainer
Procure to pay covers everything from a request to buy something to paying the supplier. Here are the steps, the controls that matter, how P2P software fits and where most organisations lose money.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
Procure to pay, often shortened to P2P and sometimes called purchase to pay, is the end to end process of buying goods and services: from identifying a need, through requisition, approval, ordering and receipt, to matching the invoice and paying the supplier. It sits between procurement, which decides what to buy and from whom, and accounts payable, which pays for it.
Source to pay adds the strategic stages in front: category strategy, supplier selection, tendering and contracting. Procure to pay starts once the supplier and the contract are in place.
| Measure | Why it matters |
|---|---|
| Share of spend on a purchase order | Visibility and control of commitments |
| Invoice cycle time | Cost and supplier relationships |
| First time match rate | How efficient matching is |
| Cost per invoice | Efficiency of the whole process |
| On time payment | Supplier relationships and the payment practices that large UK companies must report |
| Ageing of exceptions | The hidden backlog |
Most ERP systems include purchasing and payables. Specialist procure to pay suites add guided buying, catalogues, invoice capture, supplier portals and workflow automation. Choose on your spend profile, how much is catalogue, contract or one off, and how well the tool connects to your ERP, rather than on the length of the feature list.
Related reading: finance transformation, order to cash explained, the month end close checklist, software procurement and selection.
The end to end process of buying goods and services, from requisition and approval through ordering and receipt to invoice matching and payment.
None in practice: they are two names for the same process. Source to pay is the wider term that also covers sourcing and contracting.
Checking that the purchase order, the goods receipt and the supplier invoice agree on quantity and price before an invoice is paid.
Software that automates the procure to pay process, from guided buying and purchase orders to invoice capture, matching and payment, usually integrated with the ERP.
If payables is drowning in exceptions or spend is escaping purchase orders, the fix is usually process and data before software, and we can help you find the quickest wins.