Procurement or requisitioning has always been a hassle for companies, especially for the financial departments. Apart from factors such as maverick spend which would lead to expenditures that a company had not anticipated or did not have an absolute necessity to incur, there are several more aspects that only create complications. For instance, the overburden of mounting invoices from various vendors which would just make the task of any accountant or entrepreneur a never ending and toilsome exercise.
P2P which is an acronym for ‘purchase to pay’ has become a well formed concept of which many businesses are trying to take full advantage. A P2P system offers a completely closed loop procurement process or strategy. Purchase to pay does not restrict its utilities to the purchasing or requisitioning departments but involves the decision making management executives, financial department and also the vendors or suppliers. Over the last ten years, businesses have put various ERP (Enterprise Resource Planning) tools and applications in place to streamline the entire procurement cycle.
Besides streamlining requisitioning, P2P has several other benefits and the financial advantages are often the greatest contributing factor when examining the option of converting to closed loop procurement software. With Purchase to Pay software in place, businesses can have every department requisitioning items from a preset portal; the items requisitioned can be sourced from the available online catalogs of vendors and then a purchase order is raised which is subsequently checked and approved by the management. The management reserves the right to approve any requisitions subject to the company policies and budgets. Furthermore, the invoices, delivery and stock maintenance can all be carried out using the P2P system. In effect, a company gets a closed loop procurement strategy in place that manages to ensure that every department is well supplied with required items, stocks are properly recorded in the centralized system, expenditures do not get out of control and all invoices converge onto one which then makes the finance department’s job an easy one.
Having a closed loop procurement strategy is no longer an option for businesses that intend to save money on unnecessary requisitions and it is perhaps the only way to ensure that the entire requisitioning modus operandi across departments function in a seamless manner. Purchase to pay software has several other benefits including real time record maintenance of stocks, shifting of items from warehouses and also manages to act as an automated bookkeeper and accountant. P2P is integral and essential to have a closed loop procurement system.