If you’re running a business, you need to understand what source-to-pay (S2P) can do for you. S2P is a payment process that goes a little further than procure-to-pay (P2P) processes. Instead of beginning with determining your company’s needs and submitting requisitions, S2P processes begin with the supplier relationship.
An S2P model requires an automated system that can streamline processes like requisition, ordering, receiving, and paying. It also requires an emphasis on supplier management and a willingness to put in the work to maintain that relationship. In the end, it’s worth it – the benefits to your business include reduced costs, streamlined processes, and more functional supplier relationships.
Stronger Supplier Relationships
S2P processes begin with strong supplier relationships and strong supplier management. The process begins with the supplier-side conversation and then proceeds through requisition, purchase, delivery, and payment. Successful supplier management is the core of any source-to-pay process, so it’s important that strong relationships are built with suppliers who have been evaluated based on their stability, company code of conduct, and ability to meet regulatory or industry standards. You’ll build a stronger supply chain by choosing your suppliers carefully. Many source-to-pay software tools offer supplier risk-analysis tools to make the decision easier.
When you implement S2P software, you’ll gain a lot of time – time that was previously spent on processes that have now been automated. The average cost of processing a paper invoice is $12 to $35. When you automate that invoice processing, you can save time and reduce some of those costs. If you saved about a third on your invoice processing, that could add up to a savings of tens of thousands a year – or more, depending on how many invoices you process.
That’s not the only way that S2P can save you money. A source-to-pay system can foster greater leverage for negotiation – when payments are dispatched quickly, and irregularities are dealt with swiftly, vendors will be more inclined to offer favorable terms. You’ll be able to onboard new suppliers more easily, and you’ll be able to take the time to make sure your established supply chain meets most of your demand so that you don’t have to rely on expensive off-contract purchases.
The main benefit of S2P software tools is their ability to streamline so many of the processes in the procurement cycle. A source-to-pay system offers visibility that keeps vendors confident about their payment status, so transactions happen efficiently. You’ll communicate with suppliers faster. You can even automate tasks having to do with contract negotiation and contract lifecycle management.
The time savings you’ll unlock with a source-to-pay software solution will be substantial. You’ll be taking many repetitive and boring tasks off of employees’ desks, or making them easier to manage so that more employee time will be freed up for more complex tasks.
The interconnectivity that S2P procurement software can bring to an organization means that new suppliers are onboarded faster, requisitions are approved faster, and productivity goes up. Making it easier for people to do their jobs will boost efficiency.
You should have an S2P software tool that’s easy for your employees to use. An interface that everyone can interact with effectively is vital to the success of new software implementation. If the software is too difficult to learn, employees will resist adopting it and benefits will be limited. All purchasing will go through the system, so employees will have to use the system, but that doesn’t mean it’s not worthwhile to have an easy-to-use, consistent interface to encourage employees to not just grudgingly use, but actually enthusiastically learn the new program. It’s one of the best ways to boost efficiency in purchasing and procurement processes.
Source-to-pay software can give you access to valuable data that you can use to make better decisions for your business. Spend analysis features allow you to collect and analyze any kind of data available to your S2P system – supplier payment data, sourcing data, contract management data, or even spending and invoicing data. More visibility into spending and purchasing data is just what you need to optimize your company’s spending.
If your business isn’t yet using a source-to-pay software tool yet, you need to upgrade your procurement processes in a big way. S2P procurement processes can strengthen your supplier relationships and your supply chain, save you money, and streamline many of your processes through automation. It’s how global corporations manage their resources and costs, and it could work just as well for you.