Posted in Financial Process Automation

Why the Procure-to-Pay Process is Going Digital

As digital transformation sweeps across the globe, organizations are looking to use technology to improve efficiency in all departments. The procurement department, which owns the overall procure-to-pay (P2P) cycle, is no exception. Digital or e-procurement has the potential to hugely impact P2P.

What Is Procure-to-Pay?

Procure-to-pay is an umbrella term for the process of requisitioning, ordering, purchasing, and receiving goods or services for an organization. It’s a standard, necessary part of any business operations that may or may not involve multiple stakeholders depending on the size and hierarchy of the company. The process usually requires a lot of paperwork and time to complete fully.

How Does the Procure-to-Pay Cycle Work?

Procure-to-pay process

The process typically includes the following steps:

  1. Identifying the need for the goods and services the business seeks to obtain from an external supplier
  2. Exploring and choosing a vendor
  3. Negotiate the contract with the supplier
  4. Approving an internal purchase requisition
  5. Create the purchase order
  6. Receive invoice and complete payment
  7. Record and audit the delivery for accuracy and quality purposes
  8. Keep records of invoices

What Is the Current State of Procure-to-Pay?

Overall, P2P cycles seem to be improving with 61% of respondents in the Deloitte Global Chief Procurement Officer Survey 2018 experiencing better year-on-year savings. There’s also an increasing awareness of the benefits of digital procurement, with 33% saying their digital strategy will help them achieve their goals.

However, there’s still a long way to go in terms of organizational efficiency and adoption of technology. Some of the most common problems in procurement include:

  • Maverick spending: Hasty, overly risky decision-making in an effort to respond quickly to new technologies and innovate faster. While being open to new processes is a valuable skill, going overboard and purchasing more than necessary leads to waste in the long run. 
  • Unnecessary risk: This goes hand-in-hand with the above. New purchases often come with a fair amount of risk but rather than working to reduce that possibility, decisions can be made on a whim or rush without thinking about consequences down the line.
  • Too much bureaucracy: On the other hand, too many restrictions and rigid procedures can slow down procurement and delay product launches. Streamlining paperwork can help reduce this problem.
  • Corporate Social Responsibility (sustainability): According to IBM, 97% of highly successful organizations are heavily involved in CSR, compared to just 61% of all companies. Sustainability is a key area for procurement to assist with significant cost savings and innovation for the entire institution. Yet many procurement teams aren’t engaging with the opportunity.

Problems are caused by old-style, inefficient processes and organizational mindsets e.g. “That’s how we’ve always done it.” But the world is changing rapidly and companies must drag procurement and its priorities into the 21st century.

Why Is the Procure-to-Pay Process Going Digital?

Procure-to=pay is going digital.

Research from Deloitte shows that over the next two years, analytics will have the most impact on procurement. However, organizations still have a long way to go before this technology becomes the norm. 

Currently, only one-third of leaders use digital technologies like predictive analytics.

What Are the Benefits of Digital Procurement?

E-procurement is just one part of the equation when it comes to going digital. While many organizations have already adopted software to digitize signatures, forms, and store documents in the cloud, the bigger picture of digital procurement reveals a greater, untapped potential for companies.

It Improves Efficiency

Equipped with data, procurement teams can increase transparency across all levels of their organizations and spot potential bottlenecks. Making purchasing decisions also become more efficient because the key stakeholders can see the live data behind the decision and make informed decisions rather than resorting to intuition and guesswork. 

e-procurement also digitizes all traditional paperwork, minimizing processing times while acquiring all signatures and filing them into appropriate departments. Forms can be filled out digitally and across mobile devices so that delays don’t occur just because people are away from the office.

It Helps Manage Risk

One of the biggest problems in procurement is a lack of transparency. A majority of procurement leaders (65%) only have visibility for their tier 1 suppliers. Beyond that, it’s hard for organizations to see any tangible data to figure out where the problem points lie.

Predictive analytics and real-time data offered by digital procurement address this problem hands-on, especially when quickly changing compliance regulations and fluctuating economies make it imperative for companies to find ways to save costs wherever they can.

It Boosts Collaboration

Finally, digital procurement improves collaboration between third-party vendors and suppliers as well as within the procurement team. Digital platforms and processes allow suppliers to gain access to data that will empower them to deliver results and ideal pricing against competitors. 

Keeping suppliers in the loop throughout the P2P process can also lead to building trust and improved communications.

How Is Procure-to-Pay Going Digital?

Compared to last year, more procurement officers realize the importance and urgency of going digital. A survey by SAP Ariba showed that almost two-thirds of CPOs are using cloud computing while 82% see that digital will matter more for procurement in 2019 than in the year before.

However, the major roadblock to going digital is budget restrictions. Large companies might use commercial e-procurement solutions such as Zycus or SAP Ariba. Small businesses cannot justify the cost. Maybe they’ll upgrade from paper to emailing Excel around. But that doesn’t really address some of the main concerns.

Simple visual tools for business process automation

Modern, visual process automation solutions offer an alternative. Even a small business without significant IT resources can easily create an automated solution that meets real business requirements.

Software like Frevvo offers pre-made templates that anyone can access and customize to create purchase orders and invoices. Visual builders make it easy for procurement teams to add or delete elements they need on the forms and add rules, e.g. automatically email a copy to all relevant stakeholders. 

These smaller, efficient solutions offer small businesses a way out of their budget restrictions compared to larger enterprises, while still getting the primary benefits of digital procurement.

Best practices to follow when going digital

Research from Efficio and Cranfield University shows that 48% of procurement officers are driven to go digital not because they truly understand its importance but because of the “fear of missing out.”

To avoid mistakes resulting from an uninformed decision, follow these tips before launching a digital transformation.

  1. Start small and take it one step at a time: Going digital doesn’t mean you have to completely revamp your entire P2P process. Start with a small piece of the pie. Whether it’s digitizing your paperwork or simply moving to eSignatures, it’s important to understand exactly what it is you’re implementing and how it benefits your process.
  2. Ensure you can analyze data to prepare for the future: Before investing in complex data analytics, be sure you understand what kind of data you need and how to interpret the information you’ll get. Think about what numbers would help you drastically improve your P2P cycle, i.e. how would you apply findings from the data?
  3. Align with corporate priorities such as sustainability: Tapping into the potential within the larger organization is key. Make procurement a fundamental part of the company’s innovative practices. 
  4. Find or train procurement talent for digital technologies: Technology alone isn’t going to help solve all your problems if your team doesn’t understand how to use it. Invest in finding or training talent that will be in alignment with your digital strategy to ensure your team doesn’t get blindsided.
  5. Get leadership onboard: Remember, procurement isn’t a lone-wolf operation. To truly make meaningful changes, you need organizational support. Do some research and present the key findings. Why is it imperative to go digital? What’s the impact it’ll have on profit margins? How much will it improve efficiency? 

A Quick Procure-to-Pay FAQ

1. What is the difference between procurement and purchasing?

Procurement describes the entire end-to-end process that goes into identifying, buying, and reviewing organizational investments. One part of that is purchasing. 

So while procurement refers to the broader set of activities related to acquiring goods and services such as coming up with a strategy, looking at data and market trends, and maintaining supplier relationships, purchasing only refers to the narrower act of obtaining quotes, comparing vendors, and processing payments.

2. What is the difference between Purchase Orders (POs) vs Invoices?

These two forms often get confused but they are not interchangeable. Purchase orders (POs) mainly help the supplier and buyer keep track of orders. They’ll include:

  • Items and quantity requested
  • The date
  • Contact/company info of the buyer and supplier
  • Any special terms such as discounts or recurring timelines

Invoices are used to track payments. They’ll include:

  • Invoice number
  • The date
  • Contact/company info of the buyer and supplier
  • Items ordered
  • Price for each item ordered
  • Shipping costs
  • Taxes
  • Discounts, if any
  • Total amount
  • Payment details such as due date terms

3. What is the difference between Purchase Orders vs Purchase Requisitions?

The main difference between a PO and a PR is that a PR is an internal document. The procurement team generates a purchase requisition to submit for review and approval before making an outside purchase.

Once this gets approved, a purchase order is created and sent to the outside vendor to initiate the buying process.

Posted in Workflows

Workflow Automation – 5 Myths to Dismiss Today

Today’s workflow software market is filled with confusing myths. In reality, automation has become affordable, easy and fast. Let’s clear up some of the worst misconceptions.

A workflow is an activity that someone in your organization performs on a routine basis to achieve a well-defined goal. Workflows are characterized by (i) a series of repetitive tasks and (ii) flow of data.

Common workflow examples used everyday across every business include purchase order processing, time off request approvals, travel reimbursements, and new hire onboarding.

Today, almost every business understands the benefits of automating these everyday processes. They know that talent is their most valuable resource and they don’t want employees to waste time on paper- or email-based processes.

Continue reading “Workflow Automation – 5 Myths to Dismiss Today”
Posted in Workflows

8 Workflow Examples That Will Help You Get Started Today

Workflow examples for your business

Companies everywhere are transforming their tedious, time-consuming, manual processes into streamlined, easy-to-use, automated processes. They’re doing it to reap the many benefits of automation technology. Updated technology improves consistency and companies have enjoyed increased productivity, availability, reliability, and performance, while drastically reducing costs.

However, each company has different automation needs and priorities. For example, a company that procures a large number of raw materials may benefit from invoice automation as opposed to a temp agency that may prefer to invest in automating new hire onboarding.

Here’s a list of workflow examples for common business processes. For each type, we’ll explain what your workflow should include to make them perform optimally.

Continue reading “8 Workflow Examples That Will Help You Get Started Today”
Posted in HR Process Automation

Top 7 HR Processes That Are Perfect for Automation

HR Process Automation

Access to world-class talent is the #1 determinant of success in the 21st century. As a result, HR employees have one of the most important roles in every company. They follow employees from the scouting and recruiting process all the way to the employee offboarding process and everywhere in between. 

Yet, too many HR departments are swamped with paperwork, taking away valuable time that could be focused on employees. In fact, on average HR employees spend 40% of their time on administrative work, either entering data from one system to another or on other tasks.

Continue reading “Top 7 HR Processes That Are Perfect for Automation”
Posted in Financial Process Automation

Purchase Requisitions – a Definitive Guide

The Purchase Requisition process

A purchase requisition is an internal document that an employee within the business creates to procure goods and services. Note that the purchase requisition is different from the actual purchase order (PO). The requisition serves to obtain approval for the purchase from their manager or a VP before Finance actually issues a PO.

Organizations use the purchase requisition process to control the generation, approval, and tracking of purchase requests. It’s part of the overall procurement process.

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Posted in Financial Process Automation

Digital Procurement Strategy – 9 Stats to Consider

Digital Procurement Strategy

When Deloitte surveyed procurement professionals in 2016, the overwhelming priority for most organizations was cost reduction (74%). The study also revealed that 60% of respondents did not have a clear digital strategy in their procurement process.

Fast forward to 2019, and things seem to be pointing in a different direction. The latest Deloitte study found a clear shift in procurement, with an accelerated pace of change in digital procurement. While cost reduction remains a priority (78%), there was a clear emphasis on innovation and value as well.

So with that in mind, here are some key statistics to focus on as we move toward 2020 and beyond.

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Posted in HR Process Automation

5 Leave Management Mistakes That Make Employees Quit (And How to Fix Them)

Leave management should be about relaxation and not paperwork.

Employee Leave Management is one of the main things HR departments handle. But, many companies get bogged down in unnecessarily long, complicated processes. Here are 5 common mistakes that can hurt your company, and ways to fix them.

1. Creating a “Vacation Shaming” Culture

In many companies, employees have to deal with comments about choosing to take vacation. These can come from higher-ups at the company, but more often than not, they come directly from peers. We’ve all heard the “You’re taking a vacation? How nice, I wish I had the time to do that,” comment.

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Posted in Workflows

50+ Key Statistics to Help You Automate Smarter in 2019 and Beyond

Key Automation Statistics You Need to Know

Every time we think we’ve got a handle on automation, new statistics emerge to challenge our perception. Just this month, McKinsey released a new report about the future of women at work, saying that an estimated 40 to 160 million women around the world will need to transition their skills.

But the report also pointed out that both men and women will be similarly affected by automation, just in different areas. Without a doubt, the effects of automated processes will be felt in every sector across all roles.

To understand the scale and importance of automation in the workplace, take a look at some of these key statistics.

Continue reading “50+ Key Statistics to Help You Automate Smarter in 2019 and Beyond”