Frequently Asked Questions (FAQ)
About the Procure-to-Pay Process
What is a procure to pay system?
A Procure To Pay system manages the creation and approval of a requisition, the purchasing communication (Purchase Orders sent to vendors), receiving, and the payment (settlement) for goods and services, typically through an Invoice.
"Procure To Pay" literally defines the different procurement processes an employee takes to acquire goods and/or services.
What is procure software?
Procurement Software, also known as eProcurement Software, is typically a web-based application that allows companies to efficiently manage their direct and indirect spend. Procurement Software allows companies to maximize the savings from the vendor contracts that they have negotiated.
Is procure to pay the same as accounts payable?
Accounts Payable is one part of the overall Procure to Pay (P2P) process, focused on the receiving of invoices and corresponding payment that is made to the vendor. Procure to Pay includes the initial user requisition, managerial approval, and creation of the Purchase Order, as well.
How does procure to pay work?
The Procure to Pay process involves five key steps to purchase a good or service. First the employee creates selects the good or service and creates an initial requisition, typically from an approved vendor. That requisition is then sent to the appropriate managers for review and approval of the requisition.
Once the requisition has been approved, a Purchase Order is created and sent to the corresponding vendor (supplier). The Supplier will ship the item to the user and also send an invoice for the amount that was shipped.
Either the initial requisitioner or another approved employee will receive the items and finally the Accounts Payable team will match the vendor invoice to the receipt and the original Purchase Order. If all three match together, the invoice will be paid.
For enterprise organizations, it is highly recommended that a Procure to Pay software solution, like BuyerQuest, be utilized to ensure that the procurement process can be managed efficiently.
What is the difference between source to pay and procure to pay?
A procure to pay software solution manages the procurement process from requisition creation through invoice settlement. A source to pay solution adds the capability to source a new vendor, including running a RFP / RFQ process, as well as negotiating a contract.
A few years ago, there was a thought in the market that bigger was better and that a single source to pay solution was the best route. Over time though, it was discovered that a best-in-class approach to procurement software was a much better option because you were not tied to a single vendor for all of your needs, thus reducing your software vendor related risk.
How do we manage procurement?
To manage the procurement process, it requires that you have visibility into where your organizations resources are being spent and control to make changes to that spend pattern.
It is recommended to use Procure to Pay software, like BuyerQuest, to provide you with the visibility to where and how your employees are spending, as well as to give you a tool that will allow you to control and redirect that spend to approved vendors.
How does procurement software work?
Procurement software works by providing your employees with a tool that manages their procurement process activities. Employees who need to purchase a good or service from a vendor can use the procurement software to track that purchase but also ensure that they are utilizing the correct vendors with the best negotiated contracts. Once the purchase is complete, procurement software also provides visibility to the Accounts Payable team so that they can leverage the data to make more strategic decisions.