Purchase-to-pay

Purchase-to-pay, often abbreviated to P2P and also called req to cheque, refers to the business processes that cover activities of requesting (requisitioning), purchasing, receiving, paying for and accounting for goods and services. Also commonly referred to as procure-to-pay.

Purchase-to-pay systems automate the full purchase-to-payment process, connecting procurement and invoicing operations through an intertwined business flow that automates the process from identification of a need, planning and budgeting, through to procurement and payment.

Key benefits are increased financial and procurement visibility, efficiency, cost savings and control. Automation allows for reduced processing times and straight-through processing where the incoming invoices are handled without any manual intervention.

Purchase-to-pay systems are designed to provide organizations with control and visibility over the entire lifecycle of a transaction – from the way an item is ordered to the way that the final invoice is processed – providing full insight into cashflow and financial commitments and is now deemed an important tool for proper implementation of Resource Accounting and Budgeting, not least by UK Government Departments such as HM Treasury. Financial commitments are understood at the point they are committed to rather than when invoiced.

Organizations automate invoice processing and purchasing policies and procedures to bring financial rigor and process efficiency to the business of buying.

Both purchase order (PO) and non-PO spending, capital, credit card and reimbursable spending can be captured and controlled through automated P2P systems. Finance departments can also enforce internal spending controls and have instant access to data that tells them who is spending, what they are buying and paying for, and with which vendors.

As a result, efficiency and cost saving benefits can be substantial.

The term emerged in the 1990s and is one of a number of buzz phrases (like B2B, B2C, G2C etc.) that emerged as Internet applications became used more widely in business. Although it does not necessarily refer directly to the application of technology to the purchasing process, it is most often used in relation to applications like e-procurement and ERP purchasing and payment modules.

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Wikipedia