future of procure to pay

The Future of Procure to Pay – Beyond the ERP

Even though executives see digitalization and robotic process automation as having the greatest impact on their procurement processes over the next 10 years, adoption of automated systems in procure to pay is still low.

The Limitation of Enterprise ERPs

Many companies still default to doing all purchasing and accounts payables in their ERP. The process is highly dependent on paper, both in the manual handling of it and usage for invoices, purchase orders, goods receipts, communications and filing.

The challenge for purchasing

On the purchasing side, most ERPs do not have purchase requisitioning systems. Those that do are expensive to operate, and lack adequate flexibility in workflow design. Secondarily they lack the electronic communications capabilities to communicate orders directly to suppliers, resulting in longer than necessary product lead times. Because of the complexity involved, many companies only use their ERP purchasing systems for inventory or direct purchases. This leaves 40-50% of transactions unmanaged and open to all the problems related to maverick spending.

The challenge for accounts payable

On the accounts payable side, the majority of vendor invoices are sent via email or arrive via the postal service. Data is then entered into the ERP. This is a time consuming and tedious process that is prone to human error. Many times the invoices do not match available purchase orders, goods have not been received, the dollars are out of sync or they simply don’t have a PO. All of these items must be handled manually.

Audit demands

Ultimately any paper invoices have to be filed and/or scanned and archived for research and audit purposes. Compliance demands that auditors can see the lifecycle of every transaction, from start to finish.

future of procure to pay

Beyond the ERP: Procure to Pay Automation

  1. Current and future systems must have the ability to connect and communicate with many other business systems, such as multiple ERPs, multiple file formats, and multiple reporting.
  2. New systems must be able to “translate” file formats to reduce cost and increase adoption/usage.
  3. Companies must maximize PO usage to reduce maverick spending, increase control, and have an approval and transaction workflow that leverages robotic automation.
  4. Complete information (invoice image, PO, goods receipt data and messaging) has to be visible to approvers, allowing unmatched transactions to be handled quickly and efficiently.
  5. User interfaces giving the knowledge worker the tools and services they need such as ad-hoc routing to colleagues, along with email and portal communications with vendors, to reduce cycle times.
  6. A modular approach to procure to pay systems benefits both staff learning curves and company adoption schedules. “Full solutions” provide a pre-integrated environment that communicates with ERPs and gives more opportunity to improve operations in the future.

Get more information on how Palette Procure to Pay Automation can help empower your organization.