Procurement can be complex for any organisation and this can limit its cost-effectiveness. A procurement process that isn’t cost-effective can substantially increase expenses and impact the business more widely. At a time when many businesses and individuals are looking for ways to reduce costs, purchase-to-pay (P2P) solutions can offer greater savings by helping businesses to overcome challenges in the procurement process.
If procurement is a pain point for your organisation, P2P can offer substantial benefits. In fact, organisations have reported that an optimised P2P system can save between 30% and 50% of purchase order and invoice costs, with the overall cost of supply chain management lowering by 15-20%. Let’s look in more detail at how P2P leads to valuable savings for a broad range of organisations.
What is the purchase-to-pay process?
Also referred to as eProcurement, the P2P process relies on fully automating the purchase of goods and services for businesses. An automated system streamlines workflows, saving time, labour, and money. Using this procurement solution also increases the capacity of businesses to make data-driven decisions, which improves cash flow and access to working capital. This benefits operations across the organisation.
Automating your procurement process delivers a host of other positives too. This system boosts transparency and visibility both internally and throughout the entire supply chain, makes the entire invoicing process more efficient, and reduces the risk of human error. This is important when tail-spends are becoming an issue and gives greater control over organisational spend. Organisations also report that optimising P2P can reduce cycle times by up to 50%.
Read: Purchase-to-Pay (P2P) best practices.
How does purchase to pay deliver savings?
The P2P system delivers valuable savings for businesses in a number of different ways. For every £10 invested in an eProcurement system, businesses can see savings of up to £72. These substantial savings mean that businesses are increasingly seeing the benefit of investing in technological procurement solutions, thus making P2P systems a much more widely used business tool.
These savings come from a number of different avenues, including the ability to streamline processes and reduce internal cost burdens. Digital invoices and automated processes save time and office supplies. This reduces material and staffing costs and allows teams to redirect their attention to other activities, leading to improved productivity.
The benefits for your suppliers.
Your vendors and suppliers can also experience the benefits of implementing a P2P system. Introducing any type of eProcurement system is free for an organisation’s suppliers, meaning that they also generate cost savings. This is partly a consequence of invoices being submitted digitally. Suppliers also benefit from faster processing and payments. When a P2P system is in use, supplier invoices are usually processed within 2-3 minutes of being received, with payment usually made within 10 working days. This means faster responses from suppliers and eliminates the need to wait 30 days for payment. Results from a broad range of organisations have shown that P2P systems can lower the vendor payment cycle by 30%.
An example is the Scottish Government, which uses PECOS P2P from ELCOM, introduced in 2002. Now with several years of experience in using this system, public bodies report that their suppliers are willing to engage with the system and that onboarding was straightforward due to many vendors already supplying digital invoices.
Broad procurement benefits
Whether you’re the purchaser or the supplier, there are clear benefits to introducing an automated P2P system. It’s a clear solution for making savings and streamlining processes. We offer a range of supply chain solutions for both buyers and suppliers that deliver a broad range of savings and help organisations to overcome procurement challenges. Find out more contact ELCOM today to learn about our customised solutions that can save your time and money and can adapt to suit the needs of any organisation.