What is procure-to-pay (P2P) software and how is it evolving?
Is your experience with procure-to-pay (P2P) software more friction than flow?
P2P software promises cost savings, optimized processes, and greater transparency. However, it doesn’t always deliver on those guarantees. At best, companies end up with a partial solution that might improve business processes. At worst, they invest in an expensive blunder — a white elephant solution that nobody uses.
What if we said there’s a better way?
Revolutionary new procure-to-pay solutions surpass the limits of first-generation solutions. They provide flexibility instead of rigidity, user friendliness instead of complication, and true transparency instead of obscurity.
If you’re thinking, “I’ve heard this before,” you’re not alone. As you’ll see, many finance leaders are wary of software that promises “a better way” and doesn’t deliver. So, instead of claiming a “revolution,” let’s talk about a fundamental shift in approach. Read on as we take a pragmatic look at how new solutions are specifically designed to overcome the all-too-familiar limitations of the old.
What’s the problem with procure-to-pay software?
As we said, P2P software has become ubiquitous in procurement, but its benefits haven’t lived up to its promises. Let’s look at the data.
In PWC’s 5th edition Global Digital Procurement Survey, 94% of purchasing departments said they have adopted some form of P2P software. The results have been mixed.
In some cases, like efficiency gains, the data reveals the software was mostly helpful, with 62% of respondents saying it delivered as promised. However, this still leaves a third of companies unsatisfied with their solution. In other cases, the evidence is less positive. P2P software provided transparency and traceability in only half of the cases and underperformed on procurement performance, regulatory compliance, and user experience.
The reality is that simply implementing P2P software doesn’t guarantee success — in fact, the odds may be stacked against it. So what’s at the root of this problem?
The issue lies in how P2P software is structured today. Let’s dive into how P2P solutions work to understand this better.
What is P2P software and what does it do (or try to do)?
P2P software is a catch-all term for any solution that automates the purchasing process. It can include point solutions that automate specific tasks, like purchase order (PO) creation, or end-to-end solutions that automate the whole process.
These are the most common types of P2P solutions (and what they automate):
- eProcurement platforms: Sourcing and purchasing goods and services online
- Source-to-Pay (S2P): End-to-end automation of sourcing through payment
- Procure-to-Pay (P2P): End-to-end automation from purchase request to payment
- Supplier management: Manages and optimizes vendor relationships
- Contract management: Contract tracking, storage, and renewals
- Spend analysis: Tracks, analyzes, and forecasts spending
- Supply chain management: Manages and optimizes supply chains
Goals of P2P software
Organizations usually implement P2P software to solve one or more of three problems:.
1. Procurement efficiency and transparency
Companies use P2P solutions to move from manual to digital processes, hoping to gain efficiency and greater data visibility. They may also want to use cloud-based solutions to make it easier for employees to work remotely.
2. Cost reduction
Automating manual processes can reduce processing costs and improve labor productivity to help companies save money. Many companies also implement P2P software to gain better control over their spending and reduce expensive errors and fraud.
3. Compliance and risk management
As regulatory requirements increase, companies turn to automation to improve the quality and completeness of their audit trails. Automation also makes it easier to enforce internal controls and detect and prevent fraud.
How P2P automation works at each stage of the procure-to-pay process
Let’s look at the ways P2P software streamlines each stage of the purchase-to-pay process. We’ll use a simple, six-step example.
1. Purchase requisition
The P2P process starts when an employee wants to purchase a product or service for the company. They complete a purchase requisition (PR) form and send it to their supervisor for review and approval.
How software improves purchase requisitions
Manually created purchase requisitions can contain omissions or get lost during the approval process. P2P software uses online purchase requisition forms, ensuring the necessary details are included and the PR is routed for approval, avoiding errors and delays.
2. Purchase order
The approved purchase requisition moves on to the purchasing department, which creates a purchase order and sends it to the supplier.
How software improves purchase orders
Like paper PRs, manually created purchase orders can be incomplete or may get lost in transit. Digital PO processing software automatically ensures that POs are complete and submits them electronically to vendors.
3. Delivery
The vendor receives the PO and delivers the product to the buyer. The buyer’s receiver accepts and records the delivery.
How software facilitates efficient deliveries
Receiving docks are busy, and if a company is relying on inefficient receiving and inventory systems, documents and shipments can get lost, and errors can happen. Erroneous shipping information can make it difficult to verify invoices later on. P2P software integrates with receiving and inventory management software to automatically verify and record shipments when they arrive.
4. Invoice data entry
After shipping the goods or services, the vendor sends an invoice to the buyer by physical mail or email. The buyer’s accounts payable (AP) department enters the invoice data into their accounting system and assigns general ledger (GL) codes.
How software improves invoice processing
Mailed or emailed invoices can get misdirected, causing payment delays. Additionally, manually entering and coding invoice data is error-prone and can bog down AP teams. AP automation software provides a centralized invoice address and automatically captures and codes invoice details.
5. Invoice and PO matching
Once AP enters the invoice, they cross-check the invoice details with the PO and goods receipt to verify that the invoice is accurate. If the details match, AP forwards the invoice for approval and payment. If they don’t, they investigate and correct the discrepancy.
How software makes invoice matching more accurate
Software invoice-matching tools, like Stampli Cognitive AI™ PO Matching, automatically check invoice, PO, and shipping receipt details — but more than that, Stampli understands the nuanced context of financial operations and replicates human decision-making processes. This means quickly verifying every invoice, eliminating errors and reducing processing time.
6. Payment
Finally, the approved invoice is forwarded for payment processing. The AP team checks the vendor details, chooses the vendor’s preferred payment method, and issues the payment.
How software improves payment processing efficiency
Manual payment processing is slow, and if the vendor information or invoice is inaccurate, it can result in erroneous or delayed payments. Payment processing software unifies all payment methods on a single platform and ensures that payment and banking details are accurate.
Why P2P systems fail: The problem of obscurement
In a perfect world, P2P would streamline processes and reduce errors at each of these six stages. As we’ve shown, reality is somewhat different. Despite P2P software’s capabilities, companies struggle to realize the benefits of automation. But why?
The problem is obscurement. Legacy P2P systems suffer from fundamental flaws that prevent them from delivering on their promise.
The real cost of P2P obscurement (The four horsemen of procurement)
The gap between the promise and the reality of P2P software solutions can be traced back to four fundamental flaws in their design:
- Failure to eliminate manual processes
- Poor system integration
- Limited process and data visibility
- Lack of user adoption
Each of these flaws contributes to less-than-stellar performance from P2P software by obscuring your big-picture view of procure-to-pay. Here’s how.
1. Failure to eliminate manual processes
Many P2P platforms only partially automate tasks and processes. Or, they’re so inefficient that they actually add manual tasks, such as flipping between windows or remembering lists of command codes. As a result, companies never really escape the downside of manual tasking — errors, delays, and poor scalability.
2. Poor system integration
Although most platforms promise seamless integration with ERPs and business systems, few actually deliver. The result is a mishmash of disconnected solutions, workarounds, multiple login requirements, and complex setups. The overhead of managing all the moving parts can be more of a burden than simply processing POs and invoices manually.
3. Limited process and data visibility
One of the most attractive promises of P2P automation is the ability to monitor processes and spending in real time. Unfortunately, platforms often fail to execute, delivering delayed or erroneous spending insights, poor budget tracking, and missing or fragmented data. As a result, finance teams must often manually correct the data or go without the reporting the platform promised.
4. Lack of user adoption
Last but certainly not least is user adoption. To put it bluntly, the user interface (UI) on most P2P platforms seems like an afterthought. Users quickly become frustrated with complex menus and forms, extensive training requirements, and unintuitive navigation. At best, they find workarounds — but in extreme cases, they may simply opt out of using the solution.
The bottom line is that these “four horsemen of obscurement” are blocking organizations from reaching the full potential of P2P automation. Transformation requires recognizing they exist and directly addressing their root cause. Fortunately, the evolution of P2P software provides a path forward to overcome obscurement.
Connect the dots to solve P2P obscurement
Recognizing the impact of P2P obscurement and the need to overcome it is a wake-up call for the entire industry. The problem can’t be solved by doing the same things — developing more rigid policies, layering on more technology, and adding even more complexity. It takes an intuitive and comprehensive approach that meets three requirements.
1. Every user is empowered
An effective P2P system enables every stakeholder to easily say what they need through a clear and simple interface. Users should be confident that their requests will be efficiently and professionally handled until completion.
2. Workflows must be adaptable, flexible, and accountable
There should be a clear path for executing every type of request. The software must accommodate various purchase types and service requests while ensuring accountability at each step. Clear, accountable execution paths eliminate the need for workarounds and ensure each request is processed efficiently.
3. Functional and reliable ERP and system integration
The system must deeply integrate with financial processes and systems with minimal disruption. Deep integration ensures that transactions are automatically classified and reconciled, giving users real-time visibility and control over spending, compliance, and performance.
Stampli Procurement delivers on these requirements with the only P2P system that meets you where you are. It connects every step of your procurement process to your AP process so you can automate any request and any process on one system.
Unlike traditional procurement software solutions, Stampli Procurement is designed to connect every dot in your procurement process.
Every request
Manage all purchasing, travel, office supplies, services, or anything else your business needs through one interface.
Every process
Route any request to the right person or team at the right time with simple fulfillment and approval workflows.
Every transaction
Stampli records every discussion, decision, document, and activity, giving you full visibility and a complete audit trail for each transaction.
No other solution connects P2P processes like Stampli
Stampli’s “connect and flow” methodology is a unique approach. It maps how purchases actually happen in your company and enhances your existing workflows rather than forcing new ones. This adds visibility and control features by building on workflows your employees already understand.
Stampli simplifies P2P workflows with custom approval and fulfillment workflows that you can adapt to any process and link to any outcome. The result is an unprecedented level of freedom where every purchase request can have any outcome.
To demonstrate, let’s walk through a typical request lifecycle in Stampli.
1. Request
The employee creates their request using Stampli’s online request form. They can write their request in natural language. Billy the Bot, Stampli’s AI assistant, will understand their request and help them complete it. Users can also choose one of six pre-built requests for common purchases.
2. Approval
The system automatically routes the request to the appropriate managers for review and approval. Stampli’s approval workflow supports multi-tier approvals, manager-only flows, and spending thresholds.
3. Fulfillment
Here’s where the magic happens. You can create any process for any request using our modular fulfillment and approval workflows. Simply use your existing processes or build new ones. Communication and collaboration are built into the tool — no more chasing people down to check the status of a request.
For example, the fulfillment process for a materials purchase might look like this.
Once the fulfillment process is complete, you can choose the outcome you want to have.
4. Outcome
Choose the outcome for the request. For our purchase example, the outcome could be to create a PO in your ERP or Stampli, issue a credit card for the purchase, or assign a service ticket to manage the request internally or from inventory.
5. Review and sign off
After the request is completed, you can finalize documentation, add comments or attachments, and prepare the request for reconciliation. Stampli will preserve the full history of the request for future audits and reporting.
Delivering on the promise
Unlike other P2P software solutions, Stampli delivers on its promise. It’s a true end-to-end P2P solution that brings greater control, transparency, processing efficiency, and ease of use.
Stampli has
- A user-friendly interface that doesn’t require extensive training, unlike more complex solutions.
- More mature AI capabilities than competitors, providing higher levels of efficiency.
- Flexible pricing model that lets you start with basic features and scale as needed.
- Pre-built integrations that enhance ERP functionality without a complete system overhaul.
See how Stampli will connect the dots for your P2P workflows. Schedule a consultation with one of our P2P specialists today.
