What is the Purchase-to-Pay Process?
The Purchase-to-Pay process is also known as P2P, procure-to-pay, or req-to-check. It refers to business processes that cover requisitioning, purchasing, confirming, receiving, paying for, and accounting for goods and services. The transactional volume is often high, and each step within the processes is a potential source of errors. This makes P2P a good target for process mining, which brings visibility to the entire end-to-end P2P process and identifies root causes for problems.
An example of a Purchase-to-Pay process includes process steps such as purchase order item created, vendor invoice creation, goods receipt, invoice receipt, and accounting doc cleared. Here's what a typical Purchase-to-Pay process looks like when it is visualized in a process flow chart:
Purchase-to-Pay & Process Mining
Would you like to have better procurement, lower buying prices, and higher internal efficiency? Process mining can help you improve your P2P process performance and achieve the following business benefits.
- Shorter P2P lead times
- Improved first time right rate
Lower Buying Prices
- Better discount due to shorter payment periods.
- Less maverick buying, improved use of frame agreements.
Higher Internal Efficiency
- Fewer POs without purchase requisitions.
- Fewer post-PO changes.
- Shorter lead times from invoice received to invoice posted.
- Increased automatic processing of purchases.
- More on-time deliveries.
- Better managed vendor base.
In addition to business benefits, you can also gain a fact-based understanding of your P2P process. Let's hear from one of our customers, Fauzia Khan, Business Process Manager, Nokia:
"Process mining helps you to understand, for example, in Procure-to-Pay:
- How does your ordering, procurement process look like?
- How do you raise a purchase order?
- How many approvals does the purchase take?
- What kind of teams are involved in the process?
- How often do you have rework in the process? "
Through process mining, not only can you visualize the end-to-end Purchase-to-Pay process in process flow charts, but you can also effectively find the business segments with the biggest improvement potential. You'll be able to tell which dimensions, such as vendor, purchasing organization, currency, or PO type, affect the P2P process the most, whether for good or bad.
If you'd like to know why your incoming invoices are not always connected to purchase orders, why your organization's three-way matching doesn't work the way it should, or what exactly leads to slow processing of invoices that excludes you from getting significant cash discounts, download the brochure below to get started with putting your processes in order.