Procure-to-pay

Procure-to-pay is a term used in the software industry to designate a specific subdivision of the procurement process.

The procure-to-pay systems enable the integration of the purchasing department with the accounts payable (AP) department. Some of the largest players of the software industry agree on a common definition of procure-to-pay, linking the procurement process and financial department. The steps usually included are:

• Supply management
• Cart or requisition
• Purchase order
• Receiving
• Invoice reconciliation
• Accounts payable.

Unlike source-to-pay systems, procure-to-pay systems do not include the function of sourcing.^[1] Also, notions of production planning and forecasting will be excluded from this definition since it relates to the supply chain management.

Benefits

Procure-to-pay systems are designed to provide organizations with control and visibility over the entire life-cycle of a transaction – from the way an item is ordered to the way that the final invoice is processed – providing full insight into cash-flow and financial commitments. Most of the companies using these systems look for a centralization of their procurement department, or to set up a shared services organization for the same purpose.^[2]

According to the Aberdeen Group, despite the availability of technology which can dramatically reduce the mountains of paperwork and inefficiencies plaguing accounts payable, few companies have addressed AP transformation like other processes essential to the business.^[3]

Risks

As with any system that touches a significant number of users, implementing a procure-to-pay system requires significant knowledge of the as-is business processes as well as the to-be. Change management is a key component in implementing a procure-to-pay solution.

See also

• Supply chain and supply chain management
• E-procurement
• Purchase-to-pay
• Spend management
• Contract management
• Purchasing
• Procurement outsourcing
• Shared services

References