Ultimate Guide on How to Automate Your Procure-to-Pay Process

What is Procure-to-Pay Automation?

Procure-to-pay automation is a method of accelerating your P2P process by eliminating the manual data entry and steps for time-consuming tasks that are currently involved. 

Procure-to-pay is a multi-step process that procurement teams and the accounts payable department follow to request goods or services, and invoice and pay the suppliers providing those goods or services. The procure-to-pay process that can be automated includes a lot of communication between your business and its suppliers. Each action or function of the purchasing process, invoice processing, and payment needs to be fulfilled promptly. Multiple stakeholders are involved with a role to play.

Procure-to-pay automation ranges from intake of purchase requests from employees, approvals, and creation of purchase orders in procurement and supplier invoice processing from invoice data capture through verification, three-way matching, invoice approval, and payment.

The trouble is that as companies scale and handle more payment requests, it is harder for a procurement department or finance team to keep track of all the moving parts. And the more opportunity for important data, documentation, and even spending to fall through the cracks. P2P automation solutions support cost savings and productivity at the same time.

Using automation software for procure-to-pay automation eliminates or greatly reduces the need for manual tasks, spreadsheets, and emails. Instead, it lessens human error, inefficiencies, and process bottlenecks. Procure-to-pay automation solutions allow users to stay up to speed with the important data and spend data management information their business needs during the supplier invoice payment process and for decision-making.

Why You Shouldn’t Hold Off On Automating

Manual processes are outdated. Growing companies have trouble maintaining efficient procurement and financial processes when they don’t grow technologically alongside their teams. Don’t resist or put off the idea of automating for a later date. There’s never been a better time to automate your P2P process and modernize your business’ spend management simultaneously. 

You know a lot can be improved if you’re honest with yourself. Think of all the time your team spends trying to keep things in order, attempting to prevent important data from getting lost or executed with mistakes. When something in the procurement process is handled incorrectly and caught, it must be redone. When mishandling goes unnoticed, it can lead to missing information and wasted spending. Both scenarios hinder your business, and the goal is to create an environment where neither occurs. 

As time passes, dealing with procurement manually will likely result in more mistakes—many of which you are probably unaware of. Each leads to frustrated employees just trying to do their jobs and keep their teams and managers happy. Mistakes and time delays also have the potential to frustrate vendors and harm mutually beneficial working relationships.

Maybe you’re sure you want to explore procure-to-pay automation, but you’re not sure which processes in your business are suffering the most. Automating will help you identify all the areas that could use improvement, identify maverick spend, and keep track of and manage your business cash flow. So take the time to explore procure-to-pay automation options; automation leads to stronger procurement management and happier employees overall.

Steps to Automate Your Procure-to-Pay Process

There are six important steps of the procure-to-pay, or purchase to pay process that need accelerating before the entire P2P process can be considered automated. Pay attention to the amount of time it currently takes for you to complete each part of the process, what parts are causing you and your team the most friction, as well as where you think you have the most to gain from automation.

Purchase requests

Also known as a purchase requisition, this typically manual process requires the requestor to submit a form detailing everything about the goods or services they want to purchase, including a description, the department, budget line, vendor, and more. 

Automating the purchase requisitions or purchase request process by integrating it with your ERP or existing procure-to-pay software will alleviate the need to manually fill in the information, eliminate the opportunity for mistakes, and expedite and streamline the entire approval process. The purchase requisition process may be referred to as the intake process for procurement. 

Vendor selection 

Most teams that work with vendors regularly develop strong relationships with them. However, with a surplus of vendors, it can get difficult to recall accurately which ones you worked with when, whether the experience was satisfactory to both parties or if any deals were made. 

By automating your vendor database and easily searching through it, you can access your previously used vendors before taking the time to onboard new ones. You’ll be able to find all the relevant information you need to make your decision, including the goods and services supplied, the vendor’s pricing for these goods or services, and whether everything went smoothly with the order and delivery process.

Forming and maintaining strong relationships with vendors is a huge time saver. Having an automated, more efficient vendor selection process makes choosing a supplier easier for you and visible for your team. If, for any reason, you need to check back on discrepancies, you’ll always have easy access to proof of purchase, receiving, invoice processing, vendor payment, and more. Automating with procurement software also helps with contract management, including providing important renewal reminders and ensuring contract compliance. This can act as a safety feature to keep you covered in the event of any accusations of fraud.

Purchase orders and approvals

With an automated procure-to-pay process, a purchase order can be set to be created immediately after the purchase request is approved. This PO won’t have to be filled in manually, reducing the chance of human errors and keeping all relevant stakeholders apprised of its information and status. 

Self-Service Supplier Onboarding

Your AP automation software for procure-to-pay should include self-service supplier onboarding through a Supplier Hub portal. This portal lets suppliers enter their contact information, global payment method choice, payment information, and IRS W-9 or W-8 tax compliance form data. 

Invoice Processing

Accounts payable teams can breathe easier with a solution that automates invoice processing, including tedious parts like entering vendor data and details. No longer taking a lot of time and attention, this formerly error-prone process becomes extremely simplified.

With automated invoice processing, users can automatically route invoices to the approvers (no need to input that information yourself). Automation makes work smoother and easier within your organization. Workflows are accurate, and each PO has a digital invoice that will be attached to it. Better supplier relationships result when suppliers are kept happy by being kept up to date on their invoice status (through the Supplier Hub), eliminating the need for them to call and ask accounts payable when their payments will arrive.

Payment

With payment automatically issued to the supplier, there’s no need to input bank routing numbers or use a third-party application to process and send payments. Most teams that use an automated P2P solution integrate it with their ERP system, and in these cases, an approved invoice and subsequent payment will be sent to your system after processing through the ERP.

By processing invoices quicker and making electronic global payments in large batches, your business can pay invoices on time to earn early payment discounts and avoid late charges and shipment delays from not paying your invoices on time. 

Special features to consider in procure-to-pay automation

Automatic notifications

• Automation is a huge selling point. Automatically notify selected stakeholders to approve or reject a new request when that request gets rejected or approved and when a PO is opened following request approval. 
• Automatically notify selected stakeholders when purchase orders are approved.
• Automated renewal reminders so you don’t have to check back at old contracts or accidentally miss the timeframe for renewal.

Data log and audit trail history

• Keep an accurate activity log throughout the entire purchase order and approval process that can always be accessed and reviewed, including when your business conducts its procurement audit. 

Analytics and forecasting 

• Make sure your automated software solution provides you with the reports and analytics you need best to understand your organization’s spending, budget ahead, and make changes to budgets in real time if the need arises. Finance teams will be able to budget better, no longer fearing going over budget and instead saving time and money in the long run.

Customizable workflows

• Let team members work in the way that’s easiest for them so each team isn’t forced to use the same style of workflow.
• Sometimes, certain steps are unnecessary, or specific teams should skip certain fields on a form.

Ultimately, your team needs to be able to access the right information whenever needed. Automating your procure-to-pay process helps gather and keep everything in one place, making important data accessible and any future actions easier to carry out. It will also help streamline vital communication both within teams and between departments.

Each of these special features greatly helps you and your team expedite business processes, so don’t be tempted to skip them.

S2P vs P2P: What to consider

S2P, or source-to-pay, is often mentioned around the P2P topic. Like the P2P process, source-to-pay takes things a little further when dealing with vendors or suppliers and supply chain management. S2P solutions allow you to search for suppliers, submit RFQs (request for quote) and RFPs (request for proposal), and let the suppliers participate in bidding for the opportunity to work with you.

S2P is often a precursor to P2P processes, as it can be easily incorporated and beneficial to the greater procurement process overall.

Which Technology is Used to Automate the Procure to Pay Process?

Technology automating the procure-to-pay process includes artificial intelligence (AI), including machine learning (ML), optical character recognition (OCR) for capturing invoice data, and robotic process automation (RPA) technology for repetitive tasks. Types of AI include generative AI like ChatGPT and deep learning models as machine learning. 

Tipalti builds these technologies into its procure-to-pay automation software. 

How Tipalti can help with procure-to-pay automation

As procure-to-pay solutions, Tipalti Procurement and Tipalti AP automation, with accounting system and ERP integration, are unified to provide every important consideration we believe you should make when automating your procure-to-pay cycle. 

AI-driven Tipalti AP automation for supplier invoice processing through payment provides:

• Self-service supplier onboarding
• Supplier validation, payment tracking, and tax compliance form data collection 
• Invoice verification with detection of discrepancies 
• Digital invoice data capture using OCR
• 3-way matching of invoices with POs and receiving reports or 2-way matching
• Guided invoice approvals with communications
• Automated global regulatory compliance, including OFAC blacklist screening
• Global payments with a choice of electronic payment methods and 120 currencies in 196 countries
• Automated batch payment reconciliation and syncing with your ERP
• Ask Tipalti AIâ„  digital virtual assistant for queries regarding spend analysis
• Real-time dashboard with metrics

With Tipalti Procurement’s simple procurement solution, users can gain the control and visibility necessary to keep teams and stakeholders collaborating seamlessly. This not only translates to happy employees and finance managers but to an overall expedited process that saves businesses money and improves supplier relationships. Explore more about procurement automation from Tipalti.