The procure-to-pay process includes all activities related to procurement through financial settlement of goods and services with suppliers. Procure to pay offers a number of benefits – among these are improved supplier collaboration, lower costs and improved compliance. For most companies, the pain point is that the infrastructure is just not there to support the desired levels of speed and responsiveness, and the effect is increased demands on both financial and accounting teams.
In their report “Procure to Pay: Building a System of Synergies,” Aberdeen Group focuses on the intersection of the procure-to-pay process and business processes and how these are being leveraged.
Aberdeen finds that that the greatest pressure on the financial/accounting functions is the demand for expedited financial information delivery, followed by the need to manage the growing volume of transactions due to a growth in business. These pressures are driving efforts to integrate and automate accounts payable systems within an organization.
Part of the challenge is that few companies are using the current release of their ERP system, which makes it difficult to standardized processes. Only 40% of companies are on their current ERP release, and 36% are having difficulty integrating data from disparate sources. As well, companies are challenged aligning KPIs between finance and lines of business.
Another key finding is that many companies are using manual processes rather than AP automation solutions. These manual processes do not integrate with ERP. Best-in-class companies have deployed AP automation platforms that are tightly integrated with their ERP solutions to automate the procure to pay process.
Aberdeen found that:
In terms of procure to pay metrics:
For the procure-to-pay process, automating has become a top priority for CFOs, but it hinges on getting all invoices digitally. Comprehensive solutions provide a path to digitize even the paper invoice submissions, and once they are included, companies will have real-time visibility. This is essential to real-time cash flow management capability.