Procure-to-Pay (P2P)
Definition:
Procure-to-Pay (P2P) refers to the end-to-end process of purchasing goods or services, from the initial requisition and purchase order through to invoice processing and payment. It encompasses all the steps involved in procurement, including sourcing, ordering, receiving, invoicing, and payment.
Example:
When a department at Acme Corporation needs to purchase a new piece of equipment, they start the P2P process by creating a purchase requisition. Once approved, the procurement team issues a purchase order to the selected supplier. Upon receiving the equipment, the receiving department confirms receipt, and the supplier submits an invoice. The accounts payable team then matches the invoice to the purchase order and receiving documents, and processes the payment according to the agreed-upon terms.
Why is Procure-2-Pay (P2P) important to Procurement teams?
An efficient and well-managed P2P process is essential for procurement teams to streamline purchasing activities, control spend, and build strong supplier relationships. By automating and optimizing P2P workflows, procurement teams can reduce manual errors, improve spend visibility, and accelerate cycle times. A robust P2P process also helps to ensure compliance with procurement policies, minimize maverick spending, and capture early payment discounts. By continuously improving the P2P process, procurement teams can drive significant cost savings, enhance operational efficiency, and contribute to the overall financial performance of the organization.