How to Deploy Purchase to Pay Process Improvement

According to a Deloitte global report from August 2020, 2 in 3 companies (66%) were expecting to pursue cost reduction over the following m...

According to a Deloitte global report from August 2020, 2 in 3 companies (66%) were expecting to pursue cost reduction over the following months, compared to 38% before the Covid-19 pandemic. In this instance, purchase to pay (P2P) processes are often targeted for improvements due to the substantial amount of money that flows through them. This article will discuss the pain points usually found in a purchase to pay process, how to address them using the right features, and the benefits of such optimization to your organization.

What is a purchase to pay process?

Purchase to pay is the business process that connects the acquisition of goods and services with their respective payment. Such integration is typically automated by software, allowing companies to save time and money. 

A purchase-to-pay process is different from the broader range of activities of a Purchase department, which include sourcing items, managing their deliveries, and negotiating contracts with vendors. Purchase to pay workflows connect automated tasks from Purchase teams and Accounts Payable teams. Their usual steps are the following:

Improvements to purchase-to-pay processes include redefining existent automation, eliminating more manual tasks, and creating standards for communications. Usually, the benefits of such modifications include:

  • Reducing human errors, which are frequent when workflows are not automated
  • Accelerating the acquisition of goods and services by reducing the time to process internal purchase requests
  • Cultivating a better relationship with the vendors by ensuring a shorter response time
  • Reducing costs by avoiding mistakes on the whole process and making better deals with satisfied vendors
  • Streamlining activities of the company’s departments, ensuring all teams get what they need to work

Main problems that may affect a purchase to pay process

The 2020-2021 PwC Digital Procurement Survey shows 48% of companies interviewed had automated purchase to pay workflows in 2020. Although it represents an increase in comparison to 2017 (36%), it’s still less than half of all the cases observed. The slow rate of digitalization might be behind some of the main problems that affect a purchase to pay process. Here are some of these issues: 

  • Inquiries from suppliers: Vendors are often eager to receive their payments, and when the process doesn’t allow them to have visibility over the steps, your team will probably lose time just following up about payment statuses. 
  • Poor data retrieval:  Important data is shared between the contracting company and the contractor. When they are not properly organized, they can be lost among email threads and never be found again. That’s why it’s so important to grant everyone access to all information received — and keep these records for possible audits. 
  • Chaotic flow of purchase requests: When a department needs an item or a service, it has to create a purchase requisition, approved by managers, and send it to the Procurement team. However, these requests are often delivered incomplete or duplicated. Thus, all companies should implement standardized models to collect the necessary information in order to avoid back and forth.
  • Excessive manual tasks: A successful process should not rely on the organizational capacity of the employees involved – there’s always a lot of room for human errors. With easy-to-set automation rules, you can cut manual tasks and prevent unnecessary losses. 
  • Fragmented onboarding of suppliers: A non-standardized onboarding can create friction with suppliers. It usually happens because the information either provided by or requested to the vendor is not accurate. You can eliminate this problem by adopting fixed models to interact with recently-contracted vendors.

5 Steps to promote purchase to pay process improvement

If you are experiencing at least one of the problems mentioned above, what should you do next? To achieve the so-needed purchase to pay improvement, we recommend you follow the steps below: 

  • Look at the process and search for bottlenecks. First, you need to perform an audit to identify what’s working and what’s not working in the process. Look for manual tasks and their results. You can ask for inputs from the parties involved in the process. It’s also critical to look at the available numbers, such as exceptions caused by errors, response time to vendors and requesters, incidents regarding approval, cost balance, etc. 
  • Find automation opportunities. Once you identify the roots of the ongoing issues, check if they can be solved with automation — such as, a trigger developed with a no-code platform. Try to eliminate unnecessary tasks, even when they seem to be harmless to the process. By releasing team members from repetitive activities, they can prioritize complex issues and feel their skills are valuable. 
  • Apply standards to communication. As we mentioned, unclear and volatile requests can undermine optimization efforts. Eliminate friction and back-and-forth by sharing standardized and customizable forms with suppliers and internal clients. As such, your team receives complete information and doesn’t have to ask for clarification repeatedly. 
  • Choose the right tool. Once you have the solutions in mind, it’s time to find the software that will allow you to deploy them swiftly. The best fit would be a user-friendly platform that offers easy-to-set automation with no need to code and integrates purchase to pay requests in standard public forms. These forms need to be shareable with stakeholders and tailored according to your company’s identity and needs.
  • Align your team to ensure collaboration. To foster cooperation from managers and employees, it’s a good idea to raise awareness towards all the shifts you just implemented. Train all team members to use new software, and advocate about the importance of every solution deployed. 

Why request forms are critical to purchase to pay optimization

Public standardized forms are critical to improve a purchase to pay process, as we mentioned. The lack of consistent communication triggers massive problems. They include inaccurate acquisitions, duplicated work to clarify requests, misunderstandings with external clients and suppliers, extra labor to inform stakeholders about the status of their process, hours and hours replying to emails providing clarification, and many other bottlenecks. 

A uniform request, accessed by a shareable link, should help eliminate these issues. The ideal form is customizable to fit the company’s visual identity. It also allows stakeholders to fill the blanks with helpful information and upload requested documents. Once the information is provided, the parties involved should be notified by email. Furthermore, they must be able to receive notifications when there’s progress on their purchase or payment order. 

Finally, it’s important that these forms are integrated into an automated workflow. For instance: depending on the information provided on the public form, a task (represented by a card) can be automatically routed to a specific supervisor in case it requires approval or analysis. Ideally, these forms should also feed databases, allowing supervisors to closely watch the cash flows and other insightful numbers of the purchase-to-pay operations, such as SLAs.

Eliminate communication cracks from your purchase to pay process with Pipefy FormsTry Pipefy for free

Benefits of adopting public forms to improve purchase to pay processes

After conducting a well-planned implementation of customizable public forms, you will probably observe a streamlined P2P process. Some outcomes of adopting such strategy to improve this workflow include: 

  • Facilitated information flows from and to other teams within the organization.
  • All necessary requests to vendors gathered at one single place (the form).
  • Elimination of communication cracks, caused by non-standardized email requests.
  • Increased visibility of the payment/purchase status to stakeholders.
  • Valuable data generated about the whole process, facilitating the tracking of results.
  • Requests automatically routed to the proper supervisors.
  • Integration of all information received to an automated workflow, replacing manual tasks for automation.

Therefore, losses and delays caused by human mistakes will be avoided, allowing your company to:

  • Reduce costs
  • Increase productivity and employee satisfaction
  • Improve the relationship between the enterprise and its suppliers
  • Staff all of your teams more efficiently with the goods and services needed

Companies that deployed public forms, for instance, have already achieved impressive milestones. Samsonite, a worldwide leader in superior travel bags, started to manage all purchase requests with Pipefy, a no-code process management platform that offers public forms. 

After that, it has seen a return over investment (ROI) of 177% – saving over 2,370 paid employee hours in just five months. According to its Customer Service and Procurement Manager in Brazil, it is now possible to “set a target to reduce spending by eight percent, for example, and monitor whether we’re hitting that target throughout the year.”

Using the same features to structure its financial department, a fintech company that offers payment solutions has achieved a ROI of 192%, saving approximately 2,500 hours per month. Other teams implemented the same solution, such as Compliance, Legal, and Customer Success.

Improve your purchase to pay process with Pipefy Forms

Pipefy Forms facilitate the improvements you have been seeking for your purchase-to-pay process. With this feature, you will be able to create online public forms that can be shared with anyone. Tailor your processes according to your needs by adding your company’s logo, a preferred background, and all the information fields required. 

Deploy a perfect public form with your stakeholders, accelerate purchase and payment flows, increase visibility for finance managers, and build an error-proof automated process. Kick off the changes you need today: try Pipefy Forms for free.