How a Procure-to-Pay solution yields 360° ROI

Corcentric

A Procure-to-Pay (P2P) solution is much more than a simple automation and digitalization tool. It is, in fact, the essential pillar for procurement process alignment. The absence of digitalization in these processes leaves room for hidden costs that creep in at each stage.

However, a well-orchestrated digital transition guarantees an improvement in the overall efficiency of procurement processes. From approving requests and purchasing contracts to receiving goods, managing catalogs, and processing invoices, this transformation goes well beyond automation; it becomes the catalyst for a more efficient, resilient, and responsible business.

How does a Procure-to-Pay solution meet business’s needs?

A Procure-to-Pay (P2P) solution is an integrated system that orchestrates and automates the entire procurement and payment process within a business. Its role is crucial in the effective management of purchases, approvals, orders, receipt of goods or services, invoicing, and payments to suppliers.

P2P software helps ensure that procurement activities contribute significantly to profitability by reducing costs, minimizing risks, and improving efficiency and control. To do this, a P2P solution helps businesses:

Reduce the duration of the purchasing process and increase productivity: An easy-to-use and well-configured tool accelerates the P2P cycle and approvals.
Reduce out-of-control and out-of-contract spending: A P2P solution automatically directs users to approved supplier catalogs whose prices and other features have been contractually negotiated.
Improve visibility of procurement activities: Workflows and visual audit trails allow all stakeholders involved to see the stages and status of the procurement process. Integrated dashboards and configurable reports provide a 360° view of all procurement activities.

The result: a measurable and concrete ROI at each stage of the procurement process

How do you measure the cost of a non-digitalized procurement request process?

In an unoptimized and unautomated process, individual requests are often processed without approval and are completed manually. Historical suppliers are contacted without any prior negotiation having been requested from the company. This lack of questioning and control of orders creates a situation where employees are not aware of cost control, thus impacting the overall profitability of the company.

Whereas, in an optimized process, the initial request cost may seem higher compared to a unoptimized process. This increase, although surprising at first glance, is in reality completely normal. In an optimized process, activities related to ordering and negotiating with suppliers are carried out upstream of the request and are therefore directly integrated into its cost. These costs include the creation of the item catalog by the buyer, including catalog management in the procurement tool, sourcing, and campaigns to raise employee awareness. This initial investment results in a significant reduction in hidden costs downstream of the process.

The Corcentric advantage:

Corcentric offers specifiers (and approvers) advanced settings to define cost centers, allocated budgets, allocations, and more when creating the purchasing request. These parameters are, of course, defined in advance by the procurement teams so that requesters do not have to worry about them. Finally, other features cover all business cases that you may encounter, including delivery to several addresses for the same purchasing request, planned purchasing request, and re-evaluation of the purchasing request, etc.

How do you measure the cost of a non-digitalized approval process?

In an unoptimized and unautomated process, purchase requests do not systematically follow the path required by the defined approval process. This deviation leads to opacity regarding the budget committed at the time of approval, which complicates decision-making. In addition, uncontrolled approval delegations contribute to slowing down procurement times, thus impacting the fluidity and overall efficiency of the procurement process.

Managing validations and their delegations represents an additional cost in the optimized process. The validation flow requires active and regular management of managers and their teams, involving the precise definition of approval rules for each internal department.

This additional cost is essential to strengthen control. The approval workflow is an essential tool for enforcing internal rules, speeding up the processing of requests and ensuring compliance with the established budget.

How do you measure the cost of a non-digitalized order process?

In an unoptimized process, order flows become large and complex due to the lack of grouping of requests. This results in a multiplication of order lines and an uncontrolled proliferation of the number of suppliers. This expansion of third parties results in additional costs and exposes the company to unanticipated risks, thus compromising its operational control.

Conversely, in an automated and optimized process, order management is placed upstream of the process, thus allowing the efficient grouping of requests and delivery costs. Orders and delivery calls are automated, scrupulously following the terms of the markets negotiated by the buyer. This approach results in a significant reduction in the number of orders and associated costs, thus providing more efficient and economical procurement management for the company.

The Corcentric advantage:

Whatever the size, sector, or structure of your business, Corcentric’s order management functionality allows you to manage a variety of business cases from the simplest to the most complex:

Purchase requests consolidated within an order or divided into several orders
Intelligent workflows defined according to the parameters of your items (catalog/non-catalog, contracts, etc.)
Approve and modify defined orders using rules to fit your organizational policy
Orders modified, if necessary, even after approval
Improved expense commitment and generation of accruals where applicable
Configurable rules for tracking suppliers, budgets, and contracts
Audit trail integrated into every order
Other features include open orders, advanced communication with suppliers, and more.

How do you measure the cost of a non-digitalized reception process?

In an unoptimized and unautomated process, the receipt of deliveries is often poorly reported, which leads to a lack of visibility regarding these orders. It is unknown whether they were received in full or in part and whether they qualitatively correspond to the needs initially expressed. This greatly complicates the evaluation and monitoring of supplier quality, making it difficult to put in place effective mechanisms in this direction.

But in a digitalized and optimized process, purchase orders and delivery notes are automatically reconciled. This provides clear visibility into orders, whether partially or fully received. This automated reconciliation ensures a precise match between what was ordered and what was delivered, thus providing detailed monitoring of product or service flows.

The Corcentric advantage:

The reception functionalities included in the Corcentric P2P solution make it possible to manage different types of reception in order to adapt to all types of scenarios (excess reception, reception in quantity, partial reception in amount, partial reception in quantity and/or with changes in price, automatic/manual receipt, multi-step receipt with approval, receipt on invoice, etc.).

How do you measure the cost of non-digitalized invoice processing?

In an unoptimized and unautomated process, manual re-entry of invoice and third party data exposes you to an increased risk of errors. In addition, the accounting of certain invoices may be done without the prior approval of the person who received the goods or services, thus compromising internal control. This process, often based on paper documents, becomes cumbersome and inefficient, requiring considerable effort in terms of management and monitoring.

In the case of a digitalized process, invoice reconciliation and third party management are fully automated, thus eliminating human errors linked to manual re-entry. This automation also simplifies dispute management, offering better responsiveness to possible errors or discrepancies. In addition, this system promotes reinforced control and improved responsiveness by offering simplified and rapid access to invoice data, thus allowing more efficient and precise management of accounting processes.

The Corcentric advantage:

The invoice processing features of Corcentric’s P2P solution make it possible to manage simple and complex situations in order to increase the automatic processing rate as much as possible:

Several methods of entering the invoice file adapted to all cases, formats and reception methods:
Non-electronic (paper/scanned PDF) and electronic (cXML/EDI/Factur-X) invoices
Reconciliation of orders/receipts with invoices
Automatic management of differences with tolerance for shipping costs and other costs, tolerance on amounts, excluding tax and VAT
Approval workflows for orders, invoices, and payments
Manual reconciliation for multiple orders/receipts and contracts
Automatic reconciliation “online” and no longer just “header-footer”
And many other features (invoice without order, re-invoicing management, credit note management, analytical re-allocations, etc.)

How do you measure the cost of non-digitalized payment processing?

In an unoptimized and manual process, payment delays can create a tunnel effect feared by suppliers, where payments remain pending without a clear explanation. This lack of clarity can lead to non-compliance with contractual commitments, potentially accompanied by penalties for late payment. Additionally, the lack of visibility into cash flow forecasts complicates financial planning, which can negatively impact the relationship with suppliers and the company’s cash flow.

In an optimized and automated process, payments are generated automatically, allowing the company to meet its commitments to its suppliers. This automation also offers the possibility of more precisely anticipating future cash flow needs. With better visibility into financial flows, the company can proactively plan its payments and thus strengthen its relationships with its business partners.

The Corcentric advantage:

The Corcentric solution includes features for establishing advanced reporting and easily knowing payment statuses in real time. Internal teams and suppliers therefore have 24/7 access to payment status and transfer details.

Procure-to-Pay solution: the qualitative ROI

Risk prevention

Procurement automation makes it possible to avoid any disruption in the supply chain as well as reducing disputes with suppliers due in particular to late payment.
Collecting data and monitoring workflows makes it possible to detect and analyze any internal dysfunction. Finally, management by objectives offers detailed forecasting of commitments and therefore cash flow and allows the establishment of budget overrun alerts with the various departments of the organization.

Innovation

The involvement of suppliers since the drafting of the specifications makes it possible to rely on their business expertise and allows the company to concentrate on its core activity.
The integration of the supplier into the value chain, by the buyer, thus directly contributes to the innovation and non-price competitiveness of the company.

Quality

As internal suppliers, buyers directly influence employee satisfaction through the quality of service they provide. Reduced order placement times and product compliance with initial demand contribute to the overall performance of the organization.
Measuring the quality of purchases and analyzing their costs allows the procurement department better visibility and optimization, year after year, of the procurement strategy pursued.

Responsible procurement

Buyers participate fully in the company’s CSR approach thanks to the implementation of a responsible procurement policy.
It consists of maintaining good relations with its suppliers, anticipating the risks of dependencies, avoiding poor ratings, and above all respecting payment deadlines to guarantee the sustainability of subcontracting suppliers.

To find out more about Corcentric’s Procure-to-Pay solution, don’t hesitate to contact our experts!