Procure-to-pay is a specific subdivision of the procurement process. Whereas source-to-contract describes upstream processes, including sourcing and contract management, procure-to-pay refers to the downstream activities involved in actually acquiring goods and services. Procure-to-pay solutions create approval flows that ensure the savings negotiated during the upstream S2C part of the procurement process are delivered to the company’s bottom line. Of course, there is more to it than that. Efficient P2P solutions also strengthen compliance and control among vendors, contracts, regulations, buyers, and accounts payable. 

What is a procure-to-pay solution ?

This might seem like an odd question to ask! Didn’t we already address this question? Well, yes and no. The point here is that you will find three types of offerings on the market: 

1. Partial P2P solutions – These automate a part of the P2P process, such as eProcurement, invoicing or accounts payable. 
2. Extensions to other systems – In this case, P2P is offered as an extension to another suite of software, typically ERP or accounting software. 
3. A dedicated end-to-end P2P solution – This covers all the steps in the P2P process, including supplier management. 

Why is it worth investing in P2P automation? 

“To err is human.” Manual processes are error-prone and nowhere is this more so than in procurement. Traditional methods are no longer viable for companies whether small, medium or large, regardless of sector and geography. They render private companies uncompetitive and public sector organizations unable to optimize the value they deliver to citizens. But they can cause a variety of other problems such as internal squabbles about approvals and buying authority. They also cause unnecessary delays when in many areas of business, the ability to buy goods “just in time” is crucial to profitability and customer satisfaction and loyalty. 

Typically, manual systems break down in the three-way matching process, which involves matching purchase orders (POs), goods receipt notes, and supplier invoices to eliminate fraud, save money, and maintain adequate records for the audit trail. Three-way matching is usually done before issuing payment to the supplier post-delivery. However, manual three-way matching can easily break down and delays can occur once a certain volume of purchases is exceeded or because documentation is lost or misdirected. Notably in recent years, companies and organizations that had not automated P2P often found it impossible to function during the COVID pandemic when it was difficult or impossible to exchange physical documents or people were not physically present in offices and facilities. 

An efficient, automated P2P system is also vital to good supplier collaboration: suppliers expect to be paid promptly according to their contracts, and this is challenging if a buying organization is still relying on manual systems. 

Organizations negotiate terms with preferred suppliers. If P2P is handled manually it is almost impossible to ensure that these terms are always – or even at all – adhered to. This is not the fault of individual buyers, who cannot possibly know the details of every contract their company has signed. The problem only gets worse if the organization has negotiated deals based on volume of spend or bundling of categories sourced from particular suppliers. 

Benefits of automated P2P 

There are many reasons to invest in a fully automated P2P platform, but they can all be classified under one of three headings: savings, efficiencies and compliance. The savings that sourcing and contracts management folks secure only become reality if the folks doing the actual buying adhere to the negotiated terms. You can only ensure that this happens if each user – procurement professionals, buying departments or individual managers with buying authority – understands all of the terms from each supplier. 

Efficiencies and improvements to business performance arise when you give the user or buyer a modern shopping experience, similar to the one you get as a consumer buying goods on an online platform. This includes intelligent item suggestions, allowing users to locate the direct materials and indirect goods and services they require rapidly and effortlessly. With a modern P2P solution, they can access hosted catalogs, punchouts, and internal inventory in a unified platform, viewing and comparing items to find the best options. With a fully automated P2P solution, artificial intelligence (AI) even facilitates automatic reordering based on contracts and promotes preferred suppliers and internal inventory for a guided shopping experience. 

That same guided experience also ensures compliance with external regulations and internal business rules, reducing business risk. Shoppers are directed to preferred suppliers, items, and services. And when the eProcurement solution is linked to contract data, contract-based procurement ensures compliance by automatically applying contract terms to purchases based on item, user, or supplier. 

It’s vitally important that the eProcurement system should be simple, transparent and intuitive to ensure that buyers – even if well-intentioned – do not bypass the P2P solution. If they do, there is a risk that savings will be lost, time will be wasted, and that spend will be directed away from preferred suppliers, which can affect the organization’s relationship with them. 

Types of P2P solution 

P2P solutions can be partial, standalone, partially integrated or fully integrated. There is clearly a wide spectrum. A partial solution addresses only one part of the process. This is not necessarily a bad thing as many companies see the advantage of implementing P2P in stages. Typically, they will start with eProcurement. This could be a standalone solution, or it could be a module within an integrated solution. The latter is more easily extended to grow as the business grows, which will deliver progressively more value. By contrast a standalone solution is likely to reduce transparency as the data cannot be so easily shared with other functions such as invoicing and AP. 

Analytics and AI-enhanced Procurement 

Fully integrated P2P solutions also support advanced analytics, enabling the user organization to identify areas where procurement can be improved, as well as opportunities to spend more efficiently, for example by devising the optimum vendor (single, dual, multi-vendor etc.) strategies. Best and worst performing suppliers can be identified, which will help in future negotiations. With the application of machine learning and AI, users can even predict which suppliers will be most reliable in the future. 

Benefits of end-to-end automation 

A fully integrated procure-to-pay solution, often also referred to as an all-in-one solution, covers all the interlocking steps in the process from requisitioning through procurement to the receiving of goods and services, invoicing and payment. And this includes all interactions with suppliers throughout the process. To maximize efficiency all these steps and sub-processes must be integrated, and they must draw on the same source of data.  

With JAGGAER One, P2P workflows are streamlined by four software modules: eProcurement, Supply Chain Collaboration, Invoicing and Payments. Orchestration software supports these modules to make the system easy and intuitive to use through guided buying, dashboards and other facilities. Moreover, these modules connect to the upstream source-to-pay modules, including Contracts Management, to ensure that savings are captured and spend is fully compliant. APIs ensure seamless integration with the other systems in the corporate IT landscape such as ERP and accounting systems. 

On-premise or Cloud? 

Finally, when choosing a P2P solution, you must decide whether to invest in an on-premise installation, which includes server hardware, or a cloud solution, where you access data and services across the internet. Until recently security-minded IT departments were reluctant to make the jump from on-premise systems. But security technology has long since been strengthened, and procurement teams have now embraced the better experience that cloud-based P2P solutions deliver. 

The benefits of cloud computing outweigh any drawbacks by a sizeable margin. User organizations enjoy regular upgrades and improvements, while the costs are fully transparent. Cloud also provides a highly collaborative environment for buying organizations and their suppliers. Users can work alongside each other on the same contract document or sourcing event, approval workflows are managed simply, and versioning issues become a thing of the past. 

Finally, with cloud, users can work from anywhere, just as if they were in the office, without the need for costly or complicated VPN connections. The Covid pandemic showed how important this flexibility can be, as testified by many JAGGAER One user organizations. 

Conclusion ? 

Investing in a modern procure-to-pay solution offers undeniable advantages for your organization. Automated P2P systems eliminate inefficiencies, control costs, and ensure compliance with internal and external requirements—all while improving the user experience. By centralizing procurement workflows and fostering transparency, these solutions empower teams to adhere to negotiated terms, collaborate effectively with suppliers, and make data-driven decisions. The right P2P solution isn’t just a tool—it’s a strategic enabler for sustainable growth and operational excellence.