P2P is a business process that integrates purchasing and accounts payable systems, allowing for a more streamlined and efficient procurement process. In this blog post, we will explore the ins and outs of P2P, including what it is, how it works, and why you should consider implementing an end-to-end procurement solution.
Procurement is a crucial component of any company's supply chain, as it determines what resources are used to operate a business and which suppliers are selected to procure necessary goods and services. P2P consolidates the procure-to-pay process by combining all procurement activities with an organization's cash management system. This includes receiving invoices from suppliers, making payments, and reconciling invoices with purchase orders (POs).
However, doing P2P manually is not a great idea, as it can be time-consuming, prone to errors, and can take away valuable resources from your business. As the business world becomes increasingly fast-paced, companies are turning to P2P solutions to make procurement more efficient. By 2025, an estimated 50% of organizations around the world will be using a cloud-based P2P solution, according to reports.
Choosing the right P2P software is crucial for ensuring that your procurement process is streamlined and efficient. Look for a software that is easy to use, integrates with your accounting or ERP software, offers analytics, and is configurable to your business's specific needs.
ControlHub is a cloud-based P2P solution that offers a range of features to help manage your procurement process, including virtual cards, supplier integration, approval flows, budget tracking, and a free demo. By implementing an end-to-end procurement solution like ControlHub, you can regain control of your company's expenses and focus on growing your business.
What is Procure-to-Pay?
Every business needs to procure goods and services for its operations. Procurement is the process of finding, selecting, requesting, and ordering needed materials, supplies, products, or services to satisfy an organization's requirements.
Procurement is a critical component in any company's supply chain because it determines what resources are going to be used to operate a business, and which suppliers are going to be chosen to procure the required goods and services.
Procure-to-pay (P2P) consolidates the procure-to-pay process by combining all procurement activities with an organization's cash management system. This includes receiving invoices from suppliers, making payments to suppliers by credit card or e-check, and capturing and reconciling invoices with POs.
Here are some terminologies we'd like you to get well-versed with before we move on:
Requisition
A Purchase Requisition is an internal document used by employees to purchase goods or services on behalf of their firm. In many companies, this can be cumbersome because signatures can be missed, documents misplaced, and information could be not readily available to all relevant members and heads of the teams.
Purchase Order
A Purchase Order is a formal document you would send a supplier from whom you want to buy materials. You would specify clearly what items you need (quantity, price, model number, etc.) and by when. You'll mention the payment terms – whether you'll pay some advance to the supplier or whether the vendor will give you the materials on credit.
Receiving
After receiving the PO, the vendor will deliver the specified materials on the agreed date. Typically, the package will come with a “Packing Slip” attached; a document listing all items contained in the package. This document will help confirm that the materials received were, in fact, the materials requested. A good receiving process “captures” this Packing Slip in digital format, or collects a digital confirmation from the Receiver that the items arrived (or not) and record any quality issues.
Invoice Reconciliation
This is the process known as “3-way matching”, that consists in verifying that the invoices, purchase orders, and receiving documents are correct, and helps determine whether the invoice should be paid or not. A purchasing solution such as ControlHub ensures this happens in real-time so you can be certain you’ll only pay for what was requested, approved, and received, without having to sit down at a later date to sift through piles of papers.
Accounts Payable Automation
As Procure-to-pay solutions become more efficient, the obligations you establish with your suppliers become more easily manageable and can even be completely automated. E-purchasing solutions such as ControlHub enables companies to process supplier invoices in real-time and with minimal human intervention; something previously inconceivable by Accounts Payable teams.
Doing P2P Manually? Not a Great Idea
Even though Procure-to-pay is a fairly straightforward concept, there's no reason to do it manually. It'll be an unmitigated disaster if you lose invoices, forget PO numbers or make errors in processing transactions.
Besides, the time and effort required for this process can take away valuable resources from your business - resources that could be used to procure more materials and grow your business.
According to a Procurement Insights Report, 80 percent of enterprises still use manual or semi-digital procurement tools. Sometimes, employers use a procurement module embedded in their ERP software. Although this gets the job done, it doesn't make procurement as seamless as it should be. ERP procurement modules are complex, not intuitive, and can get expensive quickly as they charge per-seat.
If you're doing it manually, be prepared for hours and hours of manual work. You'll have to look all over for invoices, PO numbers, packing slips, etc., which means you're wasting time away from your business instead of using it productively. Not only that but POs can get lost or misplaced, causing a ton of damage that could be avoided if the whole procure-to-pay process was automated.
Making Procurement More Efficient
As the business world is becoming increasingly fast-paced, companies are using P2P solutions to make procurement easier. Once they do that, employees can better use their time on more valuable tasks.
It's reported that by 2025, an estimated 50 percent of organizations around the world will be using a cloud-based P2P solution. Why? Because it saves them time and money.
ControlHub, a cloud-based purchasing solution , purchase order approval software that allows employees to go through any procurement stage from any device with an internet connection – even from their smartphones!
Here's a glimpse of how easy ControlHub makes the whole purchasing process:
First you enter in a purchase request with all its details and select the vendor that will fulfill the given order. For that, you can either select a vendor from the approved vendors database or register a new one. Once the request is sent, it'll automatically go to the purchase manager (or the pre-designated approver) for approval.
Once it's approved, the software will automatically generate a PO and send it to the vendor – all without manually creating a single email! In fact, you can create multiple batch orders either to single or multiple vendors.
Not only that, but with digital vendor management capabilities, you'll have access to the company’s list of approved vendors. No need to remember which vendor was good and cheap, you can track their performance right from the software.
After that, the software will do a 3-way match. If this match turns out to be successful, it means your PO, the packing slip, and the vendor's invoice are the same. You don't have to scroll through papers comparing every detail and making sure the right items and the right quantities have been delivered. The P2P software will do it for you in a couple of seconds.
As you can see, leveraging an entire Procure-to-pay solution will save you loads of headaches, coffee, and time.
Choosing the Right P2P Software
Now that we know how P2P software can save loads of your time, let's dive into choosing the right P2P software for you. What characteristics should you look for in a P2P software?
Ease of Use: Although e-procurement seems complicated at first glance, it's actually very easy and intuitive once you have the hang of it. Make sure the P2P software you choose is easy to use so you can streamline processes across multiple departments.
Autosync with your ERP: What's the use of a P2P solution if you can't import the data to your Accounting or ERP software? A good software will automatically record all requests and transactions to your ERP, so you don't waste time recording them manually. ControlHub integrates with QuickBooks and Netsuite. Make sure the solution you choose can be integrated to the accounting software you're using.
Analytics: A P2P software should let you know how much budget you've utilized. This data should be readily available to every relevant person on the team. Also, if you are able to visualize and manage your budgets in a clear and concise way, controlling your spending limits will be a breeze. With ControlHub’s budget and approval features, you will never exceed the budget, not even accidentally.
Configurable: Every business operates differently. The right P2P tool will be adaptable so that you don't have to adapt to it, it adapts to how you conduct business. This means being able to customize the software so that it suits you specifically is essential. Otherwise, you'll have to change your procurement process entirely, and that's a headache of its own, right?
With ControlHub's purchase approval software, you won't have to worry about any of that. It's a complete Procure-to-pay solution, integrated into your Accounting and ERP software so data is automatically recorded into those systems without you having to worry about it at all!
In fact, not only does it offer the above features, it goes above and beyond to offer you:
Virtual Cards: that you can use to do transactions for each or multiple vendors. It's great for online purchases. Click here to see virtual cards in action.
Suppliers Integration: Manage all your suppliers from an integrated system and import your shopping cart directly into ControlHub. Gone are the days where you had to do everything manually and on different platforms. Click here to see the list of suppliers ControlHub has an integration with.
Approval Flows: You don't have to wait for approvals. Pre-approvals can make your life so much easier. With ControlHub, you can set spending policies that are actually followed, and configure budgets by department, project, vendor, or location.
Budget Tracking: You'll get visual data on how much of your budget you have consumed, much like how you see the mobile data left on your phone. By setting a spending limit, you'll never go over budget again.
Free Demo: Of course, what's a world-class service without a demo where you can get all of your questions answered? Request here a free ControlHub demo and regain control of your company’s expenses.
Learnings
Procure-to-pay (P2P) is a critical process for companies that rely heavily on hardware procurement. In this blog post, we learn that P2P is a business process that integrates purchasing and accounts payable systems, streamlining and simplifying the procurement process. The post delves into what procurement is, its importance, and how it can be automated with P2P solutions.
Doing P2P manually can be time-consuming, prone to errors, and take away valuable resources from your business. The business world is becoming increasingly fast-paced, and companies are turning to P2P solutions to make procurement more efficient. The post reveals that by 2025, an estimated 50% of organizations around the world will be using a cloud-based P2P solution.
The post also offers a checklist of essential features to look for when selecting a P2P software, including ease of use, integration with accounting or ERP software, analytics, and configurability. The post concludes by discussing ControlHub, a cloud-based P2P solution that offers various features like virtual cards, supplier integration, approval flows, budget tracking, and a free demo.
In summary, hardware-centric, procurement-heavy startups need to pay close attention to the P2P process to ensure that their procurement process is efficient, streamlined, and cost-effective. By implementing an end-to-end procurement solution like ControlHub, startups can save time, reduce errors, and focus on growing their business.
Frequently Asked Questions
What is P2P (Procure-to-Pay), and how can it benefit my business?
P2P is a game-changer for businesses, streamlining the purchasing process from receiving invoices to making payments. It saves you time, minimizes errors, and keeps everything organized in one place. With P2P, you'll enjoy efficiency and cost-effectiveness, leaving more resources for growing your business. It's the superhero your procurement process needs!
Why should I choose a cloud-based P2P solution?
Cloud-based P2P solutions offer flexibility, accessibility, and future-proofing. By 2025, around 50% of organizations worldwide will use cloud-based P2P solutions, so you'll be ahead of the curve! They integrate well with other software, provide nifty analytics, and are easy to use. It's like having a virtual shopping cart that automates and simplifies your procurement process!
What makes ControlHub the ideal P2P solution?
ControlHub is the superhero of P2P solutions! It's cloud-based, easy to use, and seamlessly integrates with your accounting or ERP software. With ControlHub, you'll enjoy automatic PO generation, efficient supplier integration, and virtual cards for hassle-free online purchases. Plus, the 3-way match ensures perfect harmony between your PO, packing slip, and vendor's invoice. It's like a procurement party with all the bells and whistles!
How does ControlHub simplify budget tracking and spending policies?
ControlHub empowers you to set spending policies and configure budgets like a pro. With real-time tracking, you'll have full visibility into your spending, ensuring you stay within your budget. It's like having a financial superhero on your team, keeping your finances in check and preventing overspending.
Can ControlHub handle approvals and streamline the procurement process?
Absolutely! ControlHub comes with approval flows, making sure purchases go through the right channels before they're finalized. This streamlines the procurement process, minimizes delays, and ensures everything is in line with your company's policies. It's like having an efficient assembly line for purchases!
Is ControlHub suitable for startups and small businesses?
Without a doubt! ControlHub is designed to cater to businesses of all sizes, including startups and small businesses. It's a user-friendly, cloud-based solution that will help your business soar to new heights. Say goodbye to manual headaches and hello to streamlined efficiency with ControlHub – it's the ultimate solution for startups and beyond!
