The purchase-to-pay (P2P) process refers to the flow of goods and services through your business, starting with order entry and ending with payment processing. So what does this mean in the real world?
Let’s say you need to purchase supplies for your employees, but you don’t have time to physically go shopping, wait in line at the register, and then drive home with your purchases. Instead, you could place an online order through an online retailer and select in-store pickup as your delivery option.
Automating this process not only makes it easier to track and receive payments, but it can also help you save time and money down the line. In this guide, you’ll find 9 reasons why automating your purchase-to-pay process is essential for any organization of any size.
1. Regulatory Compliance
According to a study by the Aberdeen Group, nearly 60% of organizations aren’t confident in their regulatory compliance. This is a problem because non-compliance can lead to hefty fines, damage to reputation, and even jail time.
Automating your purchase-to-pay process is essential because it helps with regulatory compliance. By automating key processes, you can ensure all relevant information is captured and that nothing falls through the cracks. This is especially important for small businesses that may not have the resources to dedicate to manual compliance processes.
2. Facilitates Better Analytics
A well-functioning purchase-to-pay process is critical to an organization’s success. It’s the engine that drives all the organization’s financial processes, and it needs to be running smoothly for the organization to function properly.
One of the main benefits of automating your purchase-to-pay process is that it helps facilitate better analytics. When all the data from your financial processes is stored in one place, it’s much easier to analyze and make sense of it. This data can be used to improve decision-making, identify areas of waste, and optimize processes.
3. Faster and More Consistent Payments
Another important benefit of automating your purchase-to-pay process is that it helps establish faster and more consistent payments. This automation can take many different forms, but ultimately it should help streamline the entire process from start to finish.
By automating your P2P process, you can avoid late payments, missed payments, and other errors that can cost your business time and money. In addition, it can help improve your relationships with vendors and suppliers.
4. Ensures Payment Accuracy
An automated purchase-to-pay process is essential to help ensure payment accuracy. This system can automate the tasks of matching invoices to purchase orders and payments, and can also help catch errors before they result in overpaying for goods or services.
Automated systems with the aid of spend analysis software can also help keep track of spending, which is essential for budgeting purposes. Having all this information in one place can also help businesses negotiate better deals with suppliers.
Overall, an automated purchase-to-pay process helps improve efficiency and accuracy in the accounts payable department, which leads to cost savings for the company.
5. Aligns with Vendor Best Practices
Organizations that don’t automate their purchase-to-pay process are missing out on important benefits. And this includes the ability to align with vendor best practices.
Vendors are increasingly requiring their customers to use electronic invoicing and payments. This helps them reduce costs and improve efficiencies.
If you’re not using an automated system, you may be paying more than necessary for goods and services—and your vendors may not be getting paid as quickly as they’d like.
6. Increases Cash Flow
When you automate your purchase-to-pay process, you help increase cash flow. This is because when you make payments electronically, the funds are transferred immediately. There’s no need to wait for a check to clear or for the money to be deposited into your account.
This immediate transfer of funds means you have more control over your cash flow. You can use the money that’s coming in to make payments on time and avoid late fees. Plus, you can take advantage of early payment discounts from suppliers.
7. Eliminates Inefficiencies
Automating your purchase-to-pay process helps eliminate inefficiencies and increase productivity. This can translate into greater cash flow, reduced costs, more streamlined operations, and higher employee morale—all of which lead to better bottom-line results.
For example, time wasted manually reconciling accounts receivable that contain duplicate or erroneous invoices can be a thing of the past when you automate your purchase-to-pay process.
Once you’ve automated, employees no longer have to waste their time trying to decipher illegible handwritten receipts—they simply scan them and send them along with a request for payment to accounting.
8. Reduces Costs
When you automate your purchase-to-pay process, you reduce both administrative and operational costs because much of a purchase order can be automated and can eliminate unnecessary steps in your purchasing process. This allows you to streamline your processes and cut down on delays.
Additionally, automation reduces labor costs by allowing a company’s workflow to become more efficient. Labor dollars spent on administering purchases will no longer go toward generating additional expenses. Instead, those dollars are reinvested in other areas of your business operations.
It also means less time spent double-checking purchases for errors or overages as most companies that implement automated P2P solutions report increases in accuracy rates from 70 to 100 percent within six months of implementation.
9. Minimizes Risks
Any business owner knows there are risks inherent in running a company. But what many don’t realize is that automating your purchase-to-pay process is one of the best ways to minimize those risks.
Here’s why: when you automate your P2P process, you have a complete and up-to-date record of all your spending. This means you can quickly and easily see where any potential problems might be arising. For example, if you’re seeing a lot of late payments, you can investigate and take steps to remedy the situation before it gets out of hand.
In addition, automating your P2P process gives you more visibility into your suppliers. This can help you spot any red flags early on, such as a supplier who’s constantly changing their prices or terms.
Don’t Get Left Behind: Automate Your Purchase-to-Pay Process Now
Automating your purchase-to-pay process is essential to improve your organization’s efficiency and bottom line. With an automated system, you can streamline your workflows, improve visibility into your spending, and avoid costly mistakes. Implementing a purchase-to-pay solution is a wise investment for any organization looking to save time and money.
So don’t wait—automate your purchase-to-pay process today!
