Procure-to-pay (P2P) or purchase-to-pay automation involves the use of software to streamline procurement and accounts payable processes and eliminate manual tasks from the workflow — this can include tasks such as:

• Requisition creation and approval
• Purchase order creation and transmission
• Invoice receipt and processing
• Payment execution
• Supplier selection and negotiation

Aside from that, procure-to-pay automation can also:

• Improve efficiency by automating repetitive tasks and providing real-time visibility into procurement and AP processes.

• Reduce errors by automating data entry and validation.

• Improve compliance by ensuring all purchase orders and invoices adhere to company policies and procedures.

• Strengthen supplier relationships by automating communications and payments.

ProcureDesk is a procure-to-pay system with advanced automation that effortlessly manages procurement and accounts payable processes. We tailor our solution to each client’s requirements so that ProcureDesk is configured to your workflows. We have experience with small and large teams and even provide custom enterprise plans so that ProcureDesk can scale with your operations.

We’ve created this guide to discuss procure-to-pay automation in more detail. We explain: 

• Steps of the procure-to-pay process
• How automation supports each procure-to-pay process step
• The benefits of procure-to-pay automation
• Solutions to automate the procure-to-pay process
• How ProcureDesk supports P2P automation

What is the Procure-to-Pay Process?

The procure-to-pay (P2P) process is the complete cycle of activities involved in acquiring goods and services from external suppliers and then paying for them. It starts with identifying a business need for goods or services and ends with paying suppliers. 

The steps of the P2P process include:

• Identifying needs & creating purchase requests: The first step is to identify and define the business requirements for the goods or services to be procured. This may involve input from stakeholders of different departments, such as sales, marketing, and business procedures. Once the needs have been identified, a formal purchase requisition is created. This document outlines the specific goods or services to be procured and the required quantities and delivery dates.

• Purchase requisition approval: The appropriate stakeholders, such as department heads or procurement managers, review and approve purchase requests.

• Creating & sending purchase orders: Once requests are approved, a purchase order is created and sent to the supplier. The purchase order is a legally binding document that outlines the terms and conditions of the purchase, such as the price, quantity, and delivery date.

• Receiving & receipt management: After receiving the goods or services, the receiving department inspects them to ensure they meet the specifications outlined in the purchase order. Any discrepancies are documented and communicated to the supplier.

• Invoice management & three-way matching: The supplier sends an invoice to the accounts payable department once the goods or services have been received and accepted. The invoice is reviewed and matched with its corresponding PO and receipt to verify payment. 

• Vendor payment: After invoices are approved for payment, AP teams pay the supplier according to the purchase order terms.

The procure-to-pay process also involves measuring supplier performance. The procurement department should monitor and evaluate each supplier’s ongoing performance — specifically looking at whether they provide on-time deliveries, high-quality goods and services, and responsive support for customer needs. Then, they can use this data in sourcing strategies and contract negotiations.

What is a Procure-to-Pay Strategy?

A procure-to-pay (P2P) strategy is a comprehensive plan that outlines how your organization will manage its procurement process from start to finish. It includes everything from your methods for sourcing suppliers to payment processes. 

When developing your procure-to-pay strategy, consider the following:

• Effective Supplier Management: Outline how you’ll source suppliers and maintain relationships.

• Contract Compliance: Define how you’ll manage the purchasing process to ensure all orders adhere to company guidelines.

• Timely Payments: Establish a process for managing vendor invoices to ensure on-time payments, which supports effective supplier management and preserves relationships.

These elements ensure that your organization has good relationships with suppliers, adheres to internal policies and external regulations, and makes payments promptly.

In addition, having a well-defined procure-to-pay strategy helps you determine where to automate processes (i.e., avoid wasted time on manual tasks and human errors) and achieve substantial cost savings.

Implementing intelligent automation solutions and focusing on critical components of your P2P strategy can enhance your business’s financial performance, drive operational efficiency, and improve the effectiveness of your procure-to-pay strategy.

What Components of the P2P Process Can Be Automated?

Purchase-to-pay automation can optimize each of the steps we discussed above. 

Step 1: Purchase Request Automation

Automation streamlines the creation and submission of purchase requests, reducing the need for manual paperwork and enabling employees to submit requests digitally.

Step 2: Purchase Approval Automation

P2P automation tools can review and approve PRs for you, or they can ensure purchase requisitions are promptly routed to the appropriate approvers. 

Managers can review and approve or deny orders with just a few clicks. 

Step 3: Streamlining Purchase Order Creation

Automation facilitates the generation of purchase orders based on approved requisitions, ensuring accuracy and consistency in the ordering process. It can also dispatch POs to vendors so management doesn’t have to step in to initiate the purchase. 

Step 4: Delivery & Shipping Receipt

Automated systems optimize delivery receipt and tracking, providing real-time visibility into shipment status and receipt confirmation. They often have receipt management tools and remind users to upload receipt details after orders are delivered. 

All documents to verify purchases — POs, receipts, and invoices — are stored in the same system (more on this later). 

Step 5: Invoice Processing, 3-Way Matching & Invoice Approvals

Automation plays a crucial role in processing invoices. It automates data extraction, assists in invoice matching with corresponding purchase orders and receipts, and identifies discrepancies for resolution.

It also streamlines the invoice approval workflow, routing accurate invoices to the appropriate stakeholders for review and approval. It sends automated notifications, reducing delays in the approval process.

Automating data entry, routing, and approval management can free up employees to focus on more strategic tasks and help to reduce errors.

Step 6: Supplier Payment

Automation lets you create payment schedules, generate electronic payments, and reconcile payments — making supplier payments more efficient and accurate. It also facilitates various payment methods, such as electronic funds transfers and check issuance. 

By automating these stages of the P2P cycle, your organization can reduce manual work, minimize errors, improve compliance, and gain better control over the procurement and payment process.

This leads to cost savings, faster processing times, and enhanced supplier relationships.

Bonus: Simplifying the Vendor Selection Process

Automated vendor selection software can help your business simplify sourcing. You can create and manage a vendor database with all contracts, track supplier performance, and use insights to negotiate more beneficial payment discounts or contract terms.

What are the Benefits of Procure-to-Pay Automation?

Procure-to-pay (P2P) automation has gained popularity recently due to its ability to streamline the procurement process and enhance overall efficiency.

Did you know that by automating your entire procure-to-pay cycle, your organization can reduce invoice processing costs by up to 80%?

Let’s discuss some of the significant benefits of P2P automation.

Lowering Reliance on Manual Process

By automating repetitive tasks like data entry and invoice processing, your procurement and finance teams can focus on more value-added activities, leading to increased efficiency and productivity. 

This automation also minimizes the likelihood of human errors, ensuring accuracy in financial records and reducing the risk of non-compliance.

Enhanced Visibility

One significant benefit of P2P automation is the enhanced visibility it provides throughout the supply chain. By digitizing and centralizing data, your organization gains complete visibility into procurement processes, allowing you to track and monitor every step.

This increased visibility enables better decision-making, as your organization can access real-time data and analytics to identify bottlenecks, improve efficiencies, and optimize cash flow.

Improve Supplier Relationships

P2P automation plays a pivotal role in improving your supplier relationships. With automated processes, your organization can ensure timely payments, reduce the risk of late payment fees, and maintain positive relationships with suppliers.

Additionally, automation allows for capturing crucial supplier data, such as transaction history and current performance metrics, enabling your organization to make informed decisions when selecting preferred suppliers.

On that note… 

Enhanced Data Capture Capabilities

By leveraging technologies like optical character recognition (OCR), your organization can accurately extract data from invoices and documents, reducing the chances of manual errors from time-consuming tasks and improving data accuracy.

This data capture feature enables your organization to gain actionable insights, identify cost savings opportunities, and ensure compliance with internal policies and regulations.

Gain Insights Into Your Business Operations

P2P automation systems collect and analyze data related to procurement, allowing your organization to gain detailed insights into its spending patterns, suppliers’ current performance, and overall procurement efficiency. These insights are invaluable for informed decision-making.

Reduce Potential for Invoice Fraud & Errors

P2P automation incorporates controls and audit trails that reduce the risk of invoice fraud and ensure transactions are secure and accurate.

Improve Compliance

P2P automation enforces compliance with the procurement team’s policies and regulations. It ensures that every purchase follows established guidelines, reducing non-compliance risk and associated penalties.

Consolidate Commerce Processes

P2P automation centralizes and optimizes procurement processes, reducing fragmentation and inefficiencies. 

Accurate Supply Forecast

With accurate insights into procurement trends, your organization can better plan and anticipate its supply needs, avoiding stockouts and overstocking.

Faster Approvals

P2P automation can speed up your approval process by automating common workflows and sending notifications about requisitions or invoices that require approval. This ensures that your PRs and invoices are approved more quickly, reducing procurement delays.

Substantial Cost Savings 

Through optimized procurement solutions, your businesses can negotiate better cash discounts, identify preferred suppliers, and leverage economies of scale.

Additionally, by streamlining the entire procure-to-pay process, your organization can enhance cash flow management and identify potential bottlenecks, improving overall financial health.

How to Automate the Procure-to-Pay Process 

There are several ways to automate the procure-to-pay (P2P) process, including:

• Procure-to-Pay Software: The recommended solution, this software is specifically designed to automate tasks involved in the P2P process, such as creating purchase requisitions and orders, tracking supplier performance, and approving invoices.

• Electronic Data Interchange (EDI): EDI facilitates the exchange of electronic documents with suppliers, reducing the need for manual data entry and streamlining the P2P process.

• Robotic Process Automation (RPA): RPA software automates repetitive tasks within the P2P process, such as processing invoices and making payments.

Many P2P software programs utilize EDI and RPA to support automation and offer a comprehensive feature set to manage each step of the procure-to-pay process. As a result, they’re the most convenient solution to streamline operations. 

When automating the P2P process, carefully assess your business’s specific needs. You may choose to automate only a few tasks or decide to automate the entire process. 

Additionally, ensure that your automation solution is compatible with your existing tech stack.

When automating your P2P process, keep the following in mind:

• Identify key tasks: Start by pinpointing the most time-consuming and error-prone tasks. These should be automated first.

• Ensure compatibility: Choose automation solutions that are compatible with your existing IT systems. P2P automation software should either replace or integrate with your business applications to sync workflows.  

• Implement gradually: Roll out automation solutions in phases and monitor the results closely.

• Train your team: Provide training to ensure employees can effectively use the new automation systems.

What is Procure-to-Pay Automation Software?

Procure-to-pay automation software enables you to streamline and automate your company’s purchasing and accounts payable processes. It brings together all procurement activities, from the initial purchase request to the final payment to the supplier.

P2P software creates a seamless and user-friendly workflow for your business and teams by integrating and automating these processes.

Essential Features to Look for in P2P Software  

A high-quality P2P automation platform should provide:

• Automated reminders: Automated notifications and reminders to keep purchasers, managers, and other stakeholders informed and ensure tasks are completed on time.

• Centralized storage: A centralized repository for storing all procurement-related documents (e.g., requisitions, POs, receipts, invoices), making them easily accessible and organized. This also supports invoice reconciliation and fast vendor payments.

• Customizable purchase request forms: You should be able to customize forms and fields to capture the specific information needed for each procurement request.

• Workflow templates: A high-quality P2P system should include pre-built templates for common processes, such as approvals, budget allocation, and supplier selection, to accelerate workflow setup. 

• Rule-based automation: You should be able to specify rules and conditions for these workflows based on your organization’s policies.

• Invoice matching (two- and three-way): Your P2P system should automatically analyze and extract data from new invoices, merge duplicate invoices, and match invoices with their POs and goods receipts. Then, there’s no manual work to reconcile invoices for payment. You just need to approve matched invoices or troubleshoot invoices with discrepancies. 

• Accounting integrations: You need to be able to connect with your accounting system to push prepared invoices over for payment. Then, you can send payment through QuickBooks or NetSuite and payment status updates in both your accounting software and P2P system. 

• Reporting dashboard, including spend analytics: Robust reporting provides insights into spending, compliance, and performance metrics. These reports help you make informed strategy decisions and optimize P2P processes. 

• User-friendly features & interface: An intuitive and user-friendly interface simplifies navigation and reduces the learning curve for users.

• Transparency: Increase transparency and accountability by providing visibility into the entire procurement process, from requisition to payment.

These features collectively contribute to a streamlined, efficient, and controlled P2P process, reducing errors, improving compliance, and enabling data-driven decision-making.

Procure-to-Pay Automation with ProcureDesk 

Our procure-to-pay solution, ProcureDesk, offers robust features to support your company’s P2P processes, including: 

• Punchout and Custom Catalogs: Create a controlled shopping environment with proactive budget controls and approval trees for employee purchases.

• Automation: Streamline the entire process by automating the creation, routing, and approval of purchase requisitions, generating POs, sending them to vendors, and processing invoices and vendor payments. 

• Spend Analysis Dashboards: Access over 30 reports and complete cash flow visibility to analyze team spending, measure supplier performance, and manage contracts. 

Our highly configurable system supports various industries, team sizes, and requirements. It also integrates with all major accounting software and assorted business applications to push data between software and support your entire P2P workflow.   

We handle all set-up and guide you through onboarding so you can get started with a solution designed around your processes and goals. We’ll also show you how to make changes to ProcureDesk — add new catalogs, modify approval rules, change budgets, etc. — so you can optimize ProcureDesk as your needs evolve. 

In the following sections, we’ll briefly demonstrate how our platform supports and automates the P2P process. Additionally, you can watch a quick demo of our P2P system below: 

Streamline the Purchasing Process & Approval Workflows 

Simplify your employees’ purchase requisition process by creating a centralized purchasing hub where they can shop with vendors while staying within budgets and procurement policies. 

To create this hub, you: 

• Choose approved vendors and add their catalogs. We provide 150+ punchout catalogs so you can connect to popular sites (Amazon, Costco, Sam’s Club, Home Depot, Staples, etc.). We can also help you create custom catalogs for vendors without punchout options, making it easy for employees to select commonly purchased items. 

• Set budgets. Control costs by setting budgets by department, vendor, spend category, or project. Project-based budgets offer granular controls for tracking expenses related to different project activities.

• Create approval trees and specify requisition routing. Here is when you tell ProcureDesk automation how to handle requisitions. It can analyze details of requests and approve or deny them without human intervention, or it can route requests to appropriate approvers for policy compliance.

We’ll guide you through this setup during onboarding. 

Employees can log into ProcureDesk, see the available vendor catalogs and budgets, and start building their orders. After loading their shopping carts, employees can submit orders for review. At that time, the purchase requisition form will populate, and employees can submit details to justify their orders.

From there, our system reviews and approves, denies, or routes orders to the appropriate manager.

ProcureDesk includes omnichannel approval tools so procurement teams can approve requests via email, mobile app, or web app, making the process convenient and efficient. Employees can track and receive notifications about their purchase requests, simplifying the purchase order approval process and eliminating manual email updates.

Automatically Dispatch POs & Track Orders through Delivery 

After managers approve purchase requests, ProcureDesk automatically converts the PR to a purchase order (PO) — with terms, details, and delivery information — and sends the PO to the supplier. 

There’s no manual data entry or manager intervention required! 

ProcureDesk offers PO tracking from the moment an order is sent through to delivery. 

Vendor acknowledgments allow suppliers to comment directly on POs and communicate about orders. You can track when vendors are working to fulfill orders and view expected ship dates. Suppliers can also add tracking numbers, allowing teams to monitor orders throughout the delivery process. 

Centralize Receipts with POs & Invoices 

ProcureDesk streamlines receiving with a receipt management module. Users can verify purchases after receiving goods or services by uploading receipts and logging order quantities and conditions.

Receipts are stored in the same system as POs and invoices, facilitating our automated three-way matching. This also means procurement teams have all the details readily available to resolve order discrepancies when they occur. 

Manage Invoices & Automate Accounts Payable Processes  

Our system’s AP automation suite can fully streamline the invoice approval process. Teams can even enjoy the benefits of touchless invoice processing by using e-invoicing or vendor portals to receive supplier invoices. 

We’ll explain how this works. 

First, you can set up ProcureDesk to receive invoices automatically in our system. 

• We offer e-invoicing so suppliers can send invoices directly to our dashboard (via EDI). 

• You can create vendor portals to manage communications and supplier relationships in a dedicated, organized hub. Vendors can even drop invoices here.

• Lastly, you can connect email addresses to route emailed invoices to ProcureDesk. You can also upload physical paper invoices. 

When our system detects a new invoice, it automatically begins analyzing and extracting essential data using optical character recognition (OCR) technology — like headers, line items, amounts, and quantities. After this analysis, our system can: 

• Merge duplicate invoices. 

• Match invoices with the corresponding PO and receipt. 

• Flag invoices that require further troubleshooting (perhaps the invoice doesn’t have a matching PO or the details are incorrect).

After invoices are matched and any potential issues are resolved, ProcureDesk can automatically route invoices to a procurement manager for final review and approval, and/or your accounting system for payment. The choice is up to you.

From there, the invoice is ready for payment in your accounting system. AP teams can dispatch payments in just a few clicks. Once payment is sent, the invoice status updates in your accounting system and within ProcureDesk. 

At this point, the procure-to-pay cycle is closed out! 

Note: ProcureDesk offers seamless integrations with accounting and ERP systems, including QuickBooks, Xero, NetSuite, Sage, Microsoft Dynamics 365, and Bill.com. 

Next Steps 

Procure-to-pay software solutions offer the best way to automate P2P processes because they include features to support each step of procurement and AP workflows. They utilize EDI, RPA, and other technologies, like OCR, to eliminate manual data entry and human intervention. 

Our highly configurable and scalable platform supports various team sizes and business processes. We guide set-up and onboarding — and our platform’s user-friendly features and modern interface mean there’s little to no learning curve. 

You can optimize ProcureDesk to support your workflows as you scale; we even offer more advanced features (e.g., contract management, inventory management, and expense reporting) and enterprise packages for growing teams.