What Is a Purchase-to-Pay Process? How Can You Improve It?


Learn about common issues affecting the purchase-to-pay (P2P) process and how teams can improve the P2P process for more streamlined and accurate workflows.

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.

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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 distinct 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:

What are the benefits of purchase-to-pay process improvements?

Improvements to purchase-to-pay processes include adding or redefining existing automations, eliminating manual, time-consuming tasks, and creating standards for communications. The results of an improved and more streamlined purchase-to-pay process include: 

  • Fewer human errors, which are frequent when workflows are not automated.
  • Accelerated acquisition of goods and services by reducing the time to process internal purchase requests.
  • Better relationships with vendors by ensuring a shorter response time. This can lead to long-term savings and negotiating power. 
  • Streamlined activities of the company’s departments, ensuring all teams get what they need to work.
  • Increased data accuracy and better decision-making. Gain data insights via dashboards that pull full-time data from your process, and make strategic process improvements.
  • Less waste and more cost savings. This applies to time spent working on manual, repetitive, paper-based processes. Less time wasted tracking paperwork means faster processing times and less processing costs. 
  • Better visibility into process orders, invoicing, and payments. Never lose track of what’s due, when it’s due, and to who it’s owed.

Using low-code automation to revise and improve your process also reduces fraud or risk. With guardrails like mandatory fields within data intake forms, assigned owners, and integrating your software with a low-code automation ensures a seamless and standardized process.

Main problems that may affect a purchase-to-pay process

The 2022 Global PwC Digital Procurement Survey – 4th Edition, the main drivers for procurement digital transformation are:

Process efficiency and simplicity 59%
Process transparency and traceability57%
Cost savings47%
Crisis and risk management19%

The survey also indicated that 80% of companies with a high level of process digitalization succeed with value creation, however, 55% of companies still struggle to leverage their data. In order to achieve these benefits, procurement departments also shifted strategic priorities so as reach process digitalization.

Top strategic priorities of procurement departments

Priority 20222019
Cost reduction37%30%
Supplier sourcing and SRM24%20%
Digital transformation18%17%
Risk and crisis management 11%12%
Talent retention and upskilling 2%12%

It’s clear that departments need to go digital in order to properly, resiliently manage and address supply chain and procurement risks. But while digitalization is at the forefront, procurement professionals have reassessed actual digitalization rates following the pandemic.

According to the 4th Edition survey, procurement departments anticipated reaching an average target of 72% of digitalization by 2025. However, due to the effects of COVID-19, process digitalization rates have been downgraded by 6% on average.

As a result of this downgraded rate of digitalization, here are some issues that may affect the purchase-to-pay process:

Inquiries from suppliers

Vendors are often eager to receive their payments. When the process doesn’t allow them to have visibility over the steps, your team will lose time having to manually update the vendors about payment statuses. This can negatively impact your company’s relationship with suppliers

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:

1. 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 the quality of 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. 

2. 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 low-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. 

3. 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. 

4. 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.

5. Align your team to ensure collaboration

To foster cooperation from managers and employees, it’s a good idea to raise awareness of all the shifts you just implemented. Train all team members to use new software, and advocate the importance of every solution deployed. 

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Why request forms are critical to purchase-to-pay optimization

Public standardized forms are critical to improving 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 standardized request form, 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.

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. The outcomes of adopting this type of strategy to improve this workflow include: 

  1. Facilitated information flows from and to other teams within the organization.
  2. All necessary requests to vendors are gathered in one single place (the form).
  3. Elimination of communication cracks, caused by non-standardized email requests.
  4. Increased visibility of the payment/purchase status to stakeholders.
  5. Valuable data is generated about the whole process, facilitating the tracking of results.
  6. Requests are automatically routed to the proper supervisors.
  7. Integration of all information received to an automated workflow, replacing manual tasks for automation.
  8. Reduced costs.
  9. Increased productivity and employee satisfaction.
  10. Improved relationship between the enterprise and its suppliers.
  11. More efficiently staffed teams with the goods and services needed.

Improve your purchase-to-pay process

Pipefy is a low-code business process automation (BPA) platform that makes managing your purchase-to-pay process easy. With features like process modeling, orchestration, and integrations, teams can build and standardize processes and workflows across teams and departments for more consistency and control. 

Use Pipefy Forms to 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 with customizable and dynamic fields.

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.

Enhance agility with faster deployment using a simple drag-and-drop interface, and solve for scalability, once and for all, with a low-code automation platform that scales as your business grows.

What customers have achieved with Pipefy

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.

After that, the company saw 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.

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