Payments are too often treated as an afterthought when evaluating and implementing a procure-to-pay solution with accounts payable automation software. They are historically the domain of an ERP, a system designed to help run your internal business, supporting automation and processes in finance, human resources, manufacturing, etc. The value of a networked, intelligent, comprehensive, and extensible procure-to-pay system is widely accepted for interacting with suppliers, but the final step in the procurement process too often gets wrapped into the ERP system designed to manage internal business functions.
Evolution in Payments
Let’s take a trip back to the year 2000, the year I made my first purchase on eBay. In those days, after winning an online auction you mailed a check to the seller. After a few days of wondering if they were going to steal your money, the seller would deposit the check and ship your item. My first purchase was a used tuba, a high-dollar item, and I remember my family driving to the bank to wire funds into an escrow account to be released to the seller once the tuba arrived. In 2002, to address the friction in this experience, eBay acquired PayPal to offer secure and hassle-free payments.
Fast forward to 2024. Coincidentally, last week I purchased another tuba on eBay. The process of paying was so frictionless I barely recall anything other than clicking the PayPal button. Throughout the experience, I couldn’t help but think about the incongruence between B2C and B2B commercial interactions.
B2B Payments Today
P2P is the B2B equivalent of an eCommerce platform like eBay, so why are integrated payments still considered an afterthought? In the evolution of payments, most businesses are much closer to that 2000 eBay experience than modern day – 52% of JAGGAER invoices were paid by check in 2021.
There are a number of legitimate reasons for this lag. Buyer/supplier relationships usually run much longer than consumer businesses, so the same payment method may be used over many years. Buyers typically select new vendors through a sourcing process, so checkout friction and cart abandonment have little to do with customer acquisition. One of the main reasons, however, is that the payment process is intricately linked to accounting and lives within the ERP.
End-to-End P2P with Accounts Payable Automation Software
Putting the “pay” in your P2P system eliminates a disjointed process of bouncing back and forth between multiple systems and manually generating and submitting payment batches. Today, most AP teams review and approve invoices in their P2P system then bounce over to the ERP to add it to a payment batch. If there are changes or discrepancies that means continuing to bounce between the two systems until the batch is executed. Payment approvals are often manual or non-existent since there is no systematic solution or true accounts payable automation software to manage approval rules or audit compliance. On payment run day, a person is typically logging in to the ERP to execute the batch manually.
By incorporating the payment process in the P2P system with accounts payable automation software, these inefficiencies can be eliminated. The end-to-end process is managed in a single system – supplier onboarding, payment account and remittance collection, shopping, ordering, invoicing, and payment – with a single workflow to automate everything. Payable invoices can be automatically batched and scheduled based on due dates or discount dates. Approvals can be systematically implemented using robust, auditable rules. When the batch is approved and scheduled, it can automatically be submitted for processing to avoid single points of failure and error-prone manual processes. Finally, the payment settlement status is automatically reconciled, and general ledger entries are made in the ERP system of record via integration, leaving JAGGAER as the single user interface.
JAGGAER Pay is the cornerstone of autonomous commerce, putting the “pay” in procure-to-pay. To learn more about how JAGGAER Pay accounts payable automation software can help evolve your P2P process to procure-to-paid, check out these related resources and schedule a free consultation with one of our Payments experts by clicking here.
