The Procure to Pay solution is a function of the procurement process in the software industry that deals with how to account acquisition of goods, services, or work from an external source in the supply chain.
A company looking to more closely and efficiently integrate the purchasing department and accounts payable will likely incorporate the practice of procure to pay in their supply chain management and sales management strategies.
How does a company implement P2P?
Aligning the procurement processes with the financial department of your company can be a relatively simple process with the right understanding and streamlining of the company’s bookkeeping by using purchase order and project management software.
Breaking it down.
Procurement can be thought of as the container shaping the function of purchasing. If purchasing were water, then procurement is the vase. The container should be shaped to the unique and variable needs of your company or project.
Procure to pay gives fuller insight into outstanding financial commitments, where potential for growth might be, and how to better guide the purchasing and accounting departments of your company.
What is involved in Procure to Pay?
Essentially, procure to pay is a reconciliation of six steps of procurement taken by the purchasing department and processed by the financial department as defined by the company’s accounts payable procedures (such as authorized buying methods and approved vendors).
- supply chain
- purchase orders
- receiving or goods inwards
- invoice reconciliation
- accounts payable
How is the Procure to Pay process different from the Purchase to Pay process?
This is an important distinction to make and often confusing. The difference between procurement and purchasing is that purchasing is one element of procurement. The procurement process includes a broader view of the whole acquisition process.
A procure to pay strategy tracks the whole life cycle of a transaction from identifying the need of your company or project through to the invoice processing. An additional step in the procure to pay process can be auditing and improving the performance of the product or service and the vendor.