Why automating your P2P process is no longer an option
Automating the P2P process during the Covid-19 pandemic can help organizations save costs and ensure business continuity
The current worldwide trend of working from home, imposed by Covid-19, has posed significant challenges to organizations across all industries. With workforces scattered, using processes comprising of paper being handed from one desk to another is no longer an option.
PEX practitioners and leaders have to turn toward process automation to ensure business continuity across departments. This is especially true for the P2P process that requires input and collaboration between several departments, as managing cash flow and supplier relationships during the current pandemic has proven a serious challenge.
A fragmented P2P process can lead to the mismanagement of suppliers, slowdowns in projects reliant on the procured element, poor inventory management as a result of unreliable data, maverick purchasing, and a lack of a procurement strategy across multiple functional areas.
Automating the P2P process answers many of these challenges: it provides transparency across all stages of the procurement for finance leaders who can manage the whole process on one system; it saves employees’ time by eliminating manual tasks; and it decreases the risk of human error that can lead to duplicate invoicing and incorrect payment amounts or recipients. Not only does digital procurement increases the overall efficiency of the process, it also produces reliable data which can in turn open up opportunities for the implementation of other tools such as analytics and machine learning.
The adoption of automation for core workflows remained drastically low in late 2019. A global survey conducted by Deloitte with CPOs showed that only a small portion adopted technologies to automate core workflows and were satisfied with the results. According to the survey, 19 per cent of respondents adopted invoice processing and payments, 17 per cent introduced requisitioning and ordering technology, 11 per cent focused on spend or supply analysis and planning, with just five per cent opting to adopt supplier management solutions.
The Deloitte survey also showed that although analytics was seen as the technology that would have the most impact on the procurement process on their business over the next couple of years, only five per cent had it fully deployed while 26 per cent were still scaling it; the poor quality of the data was seen as the strongest barrier to technology adoption.
This could be overcome by automating each step of the P2P process through the integration of an automation software with an organization’s existing ERP system, providing in turn an audit trail for every transaction. This audit train, as developed by Barry O’Brien, senior consultant at SoftCo, should include:
- Requisition automation: A predefined catalog of approved vendors created by finance leaders enables full visibility over all potential suppliers, which could open up the possibility for price negotiation and cost saving.
- Invoice capture: Eliminates missing PO numbers, duplicates and flag unregistered vendors at source.
- Invoice matching: Technologies such as intelligent character recognition would allow the straight-through processing of the majority of all invoices.
- Invoice approval: Enables invoices to be moved electronically in accordance with the company’s policy, through rules created based on roles and hierarchies, in turn decreasing approval times.
With the ongoing pressure for organizations to drastically reduce costs and efficiently manage cash flows and supplier relationships during the Covid-19 pandemic, automating the P2P process is no longer an option for finance leaders and PEX practitioners – it is now a necessity.