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Procurement Automation: Top 4 Procurement Process to Automate in 2024

Vlad Falin

December 6, 2023

5

The standard procurement process is tiresome and confusing. 

You have multiple purchase requests from multiple departments. You wait weeks for approvals, and then a few more, before you can vet and negotiate with vendors. Finally, when the goods are delivered, you must assess their quality and ensure you got what you had ordered. 

All this is done with constant pressure to speed up the process and ensure procurement cost savings. It is not scalable, and it has many loopholes. Eventually, you end up with supply chain bottlenecks, increasing procurement costs. 

Such a chaotic process impacts all three core components of procurement—people, process, and paperwork. Goods are delayed, processes are tiresome, and paperwork is incomplete and scattered.

But, with automation in place, you can centralize the entire supply chain and get more visibility and control. Employees will have a dedicated platform for raising requests, the process will be streamlined, and paperwork will be consolidated on a unified dashboard. 

In this post, we will cover how you can automate your procurement process without impacting your supply chain because any mismanagement directly translates into a broken supply chain. 

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What is Automation in Procurement?

Procurement automation is the process of adopting software to digitize and centralize your procurement process. Instead of relying on forms for purchase requests, emails/Slacks for approvals, or accounting software for accounts payable, you move your procurement process onto a single platform that automates all these processes. 

procurement automation with Pluto

You just have to set the policy and workflows, and the software manages the chaotic parts while adhering to company policies. And since these software integrate with your existing accounting software and ERPs, you need not change your procurement process much. You can choose which elements you want to automate and get the flexibility to adapt to your business needs. 

Top 4 Procurement Processes to Automate

1. Purchase Requests

Purchase requests involve employees raising requests for the purchase of goods or services. They specify the goods required, and the procurement team ensures that all stakeholders give their approvals to the requests. The larger the expense, the more stakeholders involved. Plus, this becomes complex for larger firms when there are intricate hierarchies. 

By automating this process, all the requests are consolidated and the approval process is accelerated. For instance, Pluto facilitates trigger-based custom approval workflows to notify stakeholders and get approvals without disruptions. This ensures compliance with procurement policies and complete visibility into spending. 

2. Purchase Orders

Purchase orders involve creating and approving legal documents that outline the details of a purchase, including quantity, price, and delivery terms. However, this process becomes chaotic when vendor lists are scattered across platforms and you don't have proper systems for consolidating all purchase requests and orders.

Automate PO for procurement automation

Automating purchase orders consolidates all the purchase orders in a single platform. It enables multiple functions, such as converting purchase requests into purchase orders as soon as they get approved, maintaining a preferred vendors list, offering punchout systems to create purchase orders faster, etc. As a result, you enhance the accuracy of the purchase order and improve supplier management. 

3. Goods Received Note (GRN) Matching

GRN matching involves verifying that the goods received match the details specified in the purchase order and confirming their acceptance. Any mismanagement at this stage negatively impacts inventory, leaving you with poor quality or unnecessary goods. Moreover, doing this manually takes time and leaves room for errors.

Automate goods received notes in procurement

Automating GRN matching consolidates purchase orders and bills on a single platform for easy two-way and three-way matching. 

For instance, Pluto captures the receipts and matches them to the purchase orders for accuracy, expediting the reconciliation process. You get complete visibility into the products that don’t match the purchase order. As a result, the verification process fastens with minimal discrepancies.

4. Accounts payable

Accounts payable involves managing and paying invoices for goods and services received, ensuring timely and accurate financial transactions. Manually, this process takes weeks before the invoice gets approved. In other cases, teams end up paying the invoice twice, leading to the issue of double payments. In the end, procurement teams lose visibility into where the money is going, making cost optimization difficult. 

Accounts payable automation

Automating accounts payable streamlines invoice processing to reduce errors and enhance overall financial efficiency. For instance, Pluto integrates with your accounting software and payment gateways to automate payments. As soon as the invoices are approved, you get a dedicated dashboard for awaiting payments. With a single click, you make payments while ensuring data consolidation without any delays.

Top 3 Challenges in Procurement Automation 

While procurement automation can enhance your procurement process, here are some challenges that need your attention:

1. Resistance

Employees resist adopting automated processes due to fear of job displacement or reluctance to change established workflows. This happens because they don't understand the real benefits of technology and how it can assist them in their jobs. As a result, the adoption process slows down, hinders efficiency, and leads to a lack of cooperation from key stakeholders.

To overcome this, provide training and education on the benefits of procurement automation. Involve employees in decision-making and showcase successful case studies to alleviate concerns. This will set clear expectations and also help specify the requirements of the software. 

2. Implementation Cost

The upfront costs associated with implementing automation tools and systems for procurement processes are substantial. This includes costs from purchasing software and hardware and the expenses associated with system integration, training, and potential disruptions during implementation. Thus, it becomes difficult to get stakeholders on board and get approval despite long-term benefits.

To overcome this, conduct a thorough cost-benefit analysis and share the results with stakeholders. Discuss the operational efficiency of procurement automation and consider phased implementation to spread costs. Also, explore scalable solutions, so you don't have to keep reassessing and re-investing in the automation solution.

3. Security 

Security concerns about the privacy of sensitive procurement data arise with adopting automated systems, especially due to large amounts of vendor, payment, and employee data. This makes it susceptible to cybersecurity threats, raising concerns regarding data breaches or unauthorized access.

To overcome this, look for certified software ensuring data protection regulations compliance. For instance, Pluto is PCI DSS Level 1 certified, which is bank-grade security. You can also conduct regular audits and encrypt sensitive information for added protection.

Automate Procurement Process With Pluto

You can tackle these procurement automation challenges and others, too, such as flexibility, technical issues, and supply chain complexity, by choosing the right automation partner. A solution that caters to your need to provide visibility, control, flexibility, and ease without disrupting your supply chain. 

Here are some ways that Pluto can support your procurement automation to streamline the 3Ps of a procure to pay software—people, process, and paperwork::

1. Approval Workflows

You get a no-code trigger-based approval workflow engine that helps you set exact approval hierarchies to get approvals without any disruptions. You add if-then rules and set a precise and intricate workflow. 

Thus, when an employee raises a purchase request, instead of chasing stakeholders, this system notifies all of them to review and approve the requests. Also, if queries and any clarification are required, all the conversation takes place in Pluto itself, giving you complete documentation and visibility. 

2. Vendor Management 

You get a unified platform to consolidate all your vendors with integrations to your accounting software and ERPs. You can sync and manage all the vendors for faster purchase order creation. You can add the list of items and simplify the purchase order and GRN matching process.

3. Receipt Management 

You get a dedicated dashboard to manage all your receipts. Pluto captures the invoices from emails and WhatsApp and uses optical character recognition (OCR) technology to extract key information. As a result, GRN matching becomes easy as you have all the vendor, purchase order, and invoice details in one place. Also, with all the details consolidated, you accelerate the reconciliation process by documenting all the key information on a single platform. 

4. Payment Processing

You get direct integrations with your accounting software and payment gateways, making payment processing easy. Since Pluto already supports the approval process and GRN matching, you don’t end up paying for faulty goods. Also, you get all the information on a single platform with its current status and other key information, so you avoid double payments. 

5. Reconciliation

You close books 10X faster with Pluto. With OCR technology, you need not manually add general ledger and tax codes. And since all the accounting software is synced, the information remains consistent throughout the system, making reconciling easier. Also, if any discrepancies arise, you have complete visibility into each AED you spend with Pluto.

Simplify Procurement Automation

Your procurement team doesn’t need multiple procurement automation software for each process. You will end up with multiple platforms, struggling to integrate them, and spending hours trying to work the pieces together instead of getting flexibility. 

Pluto streamlines the process while facilitating integrations with your existing accounting software, ERPs, and payment gateways. You get a layer of automation that sits on top of current processes to meet your needs. Hence, you get a solution that fixes all the loopholes instead of disrupting your current processes. 

We explored the top 6 procurement software solutions for modern businesses on our blog, and recommend checking the options and picking one that offers functionality without disrupting your workflow. 

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Learn how Pluto is helping Keyper        to eliminate petty cash spending and optimize spend management

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Corporate Cards
January 30, 2024

Mohammed Ridwan

How Corporate Fleet Cards Help Modern Transport & Logistic Businesses

Companies use petty cash for managing driver and transport expenses, including maintenance, repairs, and small purchases, by allocating a small amount of physical cash to drivers. Drivers submit receipts for reconciliation, and they manually track these small transactions. 

However, tracking numerous trivial transactions becomes time-consuming, and discrepancies emerge during reconciliation. There's always a risk of misuse or theft, demanding strict security measures. Moreover, negotiating favorable terms with vendors for minor, recurring transactions becomes challenging. They must carefully budget and maintain a sufficient petty cash fund, which strains their overall cash flow.

Overall, the manual process raises efficiency concerns, necessitating a balance between control and practicality in managing day-to-day vehicle-related expenses.

A better alternative to petty cash is a fleet card. 

This post will explore corporate fleet cards, their benefits for transport and logistics, and strategies to overcome potential fuel card challenges for improved spend management.

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What Is Meant by Fleet Card?

A fleet card, also known as a fuel or gas card, is a specialized payment card used by businesses to cover expenses related to their vehicle fleets. It is issued by fuel companies or financial institutions specifically for fuel purchases, maintenance, and other vehicle-related expenses.

What Can Fleet Cards Be Used For?

The fleet cards are primarily used for fuel purchases, maintenance, and repairs. They facilitate seamless payments for routine servicing, tolls and parking fees, and purchasing vehicle-related products.

You get cards with custom spending limits and advanced controls, such as real-time transaction monitoring mechanisms, category-specific restrictions, and automated alerts for enhanced security and streamlined expense management.

Drivers purchase fuel, maintenance, and other vehicle-related expenses at authorized locations with the cards, and you enjoy complete visibility on a centralized dashboard for each transaction.

What Are the Benefits of a Corporate Fleet Card?

Switching from manual petty cash management to a fleet card yields the following benefits:

  • Simplifies payment processes by reducing the complexity of cash handling

  • Improves tracking and monitoring of all vehicle-related expenses

  • Minimizes the risk of theft or misuse, providing enhanced security measures

  • Automates the expense management and reconciliation process, eliminating manual record-keeping and ensuring accuracy with reduced likelihood of errors

  • Promotes compliance by enabling you to set controls and restrictions on card usage according to company policies

  • Enhances budgeting by providing detailed reports and insights into the spending patterns for a structured and controlled approach to managing vehicle-related costs

  • Streamlines transactions with vendors, offering an efficient payment method for small, frequent transactions

Should I Use a Fuel Card or a Credit Card?

Fuel cards and credit cards share similarities in providing a convenient payment method for expenses. Both can be used at gas stations and offer detailed transaction records for monitoring expenditures. Moreover, both cards come with features such as spending controls, reporting tools, and rewards programs.

However, here are some differences between the two:

  • Fuel cards restrict card usage to fuel and maintenance-related purchases, providing greater control and limiting potential misuse.
  • Fuel cards come with fuel discounts or rewards programs at specific gas stations, providing potential cost savings that credit cards do not generally offer.
  • While credit cards provide transaction records, fuel cards offer more detailed reporting on vehicle-related expenses like fuel consumption, maintenance costs, and odometer tracking.
  • Fleet cards partner with fuel providers, service centers, and other vendors, allowing businesses to negotiate favorable terms and discounts for bulk purchases or regular transactions. For instance, a fleet card's partnership with a fuel station yields discounted fuel prices, facilitating substantial cost savings.

So, for transport and logistics businesses, corporate fleet cards offer specialized controls for fuel and maintenance, streamlined reporting, and potential fuel-related discounts.

What Are the Risks of Fuel Cards?

Fuel cards, tailored for fleet management, are designed to address the unique needs of companies in the transport and logistics sector. However, organizations face the following challenges when switching to corporate fleet fuel cards:

1. Gas Station Availability Issues

Fuel cards encounter challenges related to gas station availability that limit refueling options. As a result, drivers can not find suitable gas stations, leading to increased travel time and delays in delivery schedules.

3. Location-Dependent Acceptance

The acceptance of corporate fleet cards varies by location, leading to constraints and inconveniences for companies operating in areas where certain cards are not widely accepted.

Drivers will encounter difficulties during interstate routes if you offer a nationwide delivery service and the fleet card is only accepted at specific gas stations or regions. It complicates expense management and hinders the company's ability to streamline fuel-related transactions.

3. Management Complexity

The specialized design of fuel cards introduces an administrative burden when managed separately. For instance, a company using distinct fuel cards for different vehicles finds consolidating expenses difficult, leading to increased administrative efforts and potential operational inefficiencies.

As a result, administrators have a hard time reconciling statements, accurately tracking expenses, and ensuring compliance. This burden increases processing times and errors in financial reporting.

4. Reward Limitations

While crafted to suit industry needs, fuel cards encounter limitations in cashback offers. Consider a scenario where a company's preferred fuel card provides cashback benefits only at select stations, restricting potential cost savings for the entire fleet. 

Source

Why Should You Switch to Pluto Corporate Fleet Cards?

Pluto fleet cards don't restrict the use of cards at their discretion. Instead, they facilitate advanced controls and real-time visibility. From issuing budgeted fuel cards to creating vendor-specific cards, you can set rules that align with your company's needs and policies. Then, with each transaction, you track all fleet expenses from a single dashboard and get real-time data without manual effort.

Pluto's corporate fleet cards

So, you set cards and add controls, and you are good to go! Drivers can spend them at convenient gas stations while you enjoy complete visibility and control. Each transaction appears on the dashboard and notifies drivers to upload the receipt directly from WhatsApp. Once uploaded, you can approve the expense, and the data syncs with your accounting software to help you close your books ten times faster.

Here are the top six benefits of switching to Pluto corporate fleet cards:

1. Unrestricted Access Anywhere

Unlike traditional restrictions, Pluto corporate fleet cards liberate your drivers. There are no limitations on locations or specific fuel stations. Enjoy the convenience of using cards at the most budget-friendly and strategically located gas stations, repair shops, or truck stops that welcome Mastercard.

2. Easy Cashback

Pluto corporate fleet cards make cashback benefits straightforward. With up to 2% unlimited cashback on over 100+ currency spends, enjoy seamless cost savings without intricate conditions or restrictions.

3. Smart Budgeting

Smart budgeting with corporate fleet cards

Pluto fleet cards, functioning as debit cards, provide smart budgeting without blocking cash flow. Drivers can request limit increases in seconds, ensuring operational flexibility with swift approvals. This distinctive feature sets Pluto apart, seamlessly blending budget management and uninterrupted cash flow for efficient fleet operations.

4. Driver-Friendly Controls

Provide drivers with budgeted fuel cards and set spending rules. Real-time data and advanced controls give you complete transparency of fleet expenses, enabling strategic decision-making.

5. Grow With Ease

Whether you have hundreds or thousands of drivers, the streamlined process of issuing corporate fleet cards and setting controls remains hassle-free, supporting your scalability with ease.

6. Eliminate Fraud

Eliminate fraud using Pluto corporate fleet cards

Lock or freeze cards instantly from the Pluto app, ensuring proactive measures against fraud. Enable company policies to ensure in-policy transactions, eliminating the risk of unauthorized spending.

Enhance End-to-End Spend Management

Pluto eliminates the need for separate investments in corporate fleet cards, offering an all-in-one spend management solution. 

Pluto's comprehensive platform facilitates both corporate purchase cards and fleet cards, streamlining your financial operations. Enjoy the same benefits as traditional corporate fleet cards but with enhanced functionality, all within a unified platform. With Pluto, you get unparalleled efficiency in managing corporate expenses, ensuring a seamless and integrated approach to financial control. 

Transform your spend management today. Book a demo and discover how Pluto can optimize your financial processes and elevate your business operations.

5
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Guides
October 30, 2023

Mohammed Ridwan

A Guide to Improve Internal Control Over Financial Reporting

Internal control over financial reporting (ICFR) refers to the legal obligation of a company to provide accurate financial statements. It requires you to adopt policies and processes that show the true picture of the company's finances. This involves:

  • Avoiding errors, fraud, or omissions 
  • Meeting deadlines 
  • Reviewing statements regularly.

An example of ICFR is inventory control, which involves maintaining accurate records of the company's goods. This requires adopting practices such as:

  • Maintaining documents, such as receipts, shipments, and adjustments
  • Segregating duties to different individuals or teams for handling, recording, and verifying inventory
  • Matching physical inventory counts with recorded inventory levels
  • Valuing inventory in accordance with generally accepted accounting principles (GAAP) principles, such as FIFO, LIFO, or the weighted average method.

These practices minimize the risk of inventory discrepancies and enhance the accuracy of financial statements.

What is the Purpose of ICFR?

ICFR is mandatory as per the Foreign Corrupt Practices Act (FCPA) of 1977 and the Sarbanes-Oxley Act (SOX) of 2002.

FCPA requires public companies to establish and maintain accounting controls. This reasonably ensures that financial statements comply with GAAP.

SOX takes this a step ahead and mandates public companies to assess the effectiveness of ICFR efforts and share the results with the public. Additionally, it demands large companies to get independent auditors for the evaluation.

Why is Internal Control Over Financial Reporting Important?

ICFR’s purpose is not restricted to being a statutory obligation. Here are five reasons why ICFR should be on your priority list:   

Accurate Financial Statements

ICFR ensures accurate financial statements that reflect the company's financial position and performance. Such reports enable investors, creditors, and internal management to make informed decisions.

Error Reduction

ICFR emphasizes the use of automation, standardized procedures, and clear documentation. This reduces the risk of errors due to human oversight, saving time and resources.

Preventing Fraud and Misconduct

ICFR employs strategies such as segregation of duties, multiple approvals, and regular audits. This reduces the chances of oversight and ensures employees do not engage in fraudulent activities.

Reliability

Stakeholders (including investors and creditors) rely on financial reports to assess a company's performance. Effective ICFR policies build confidence in the company's financial reports. 

Avoiding Costly Errors

ICFR detects errors and discrepancies before they can escalate into expensive matters. This saves significant expenses and protects its long-term viability. For example, identifying accounting errors eliminates the need for financial restatements.

What are the Components of Internal Control Over Financial Reporting? 

There are five main components of internal control over financial reporting. These are defined by the Committee on Sponsoring Organizations (COSO) of the Treadway Commission. 

These five components are also known as the COSO framework.

Control Environment 

The control environment includes the organization's standards, processes, structures, and values. It comprises:

  • Ethical values of the organization
  • Organizational structure and authority workflow
  • Processes to build a competent team
  • Focus on performance measurement, incentives and rewards.

These elements create an environment that fosters internal control in the organization.

Risk Assessment 

Risk assessment is an agile process for identifying and assessing risks. It involves:

  • Identification of potential risks that impact the ICFR efforts. This includes both internal and external risks.
  • Evaluation of the potential impact of identified risks. Some risks have a higher likelihood and a greater impact than others.

For instance, an internal risk could be employees intentionally inflating their expense reports to receive higher reimbursements. The potential impact will be financial misstatements if the risk goes undetected. 

Control Activities 

Control activities refer to the plan of action to address the risks identified during risk assessment. This requires establishing specific policies and procedures, such as:

  • Segregation of duties to prevent fraud and collusion
  • Controls in information security, application development, and system maintenance
  • Implementation of entity-level controls, such as reviewing differences between planned budget and expenditure
  • Employing preventive control, such as limited access to IT systems and automated approvals
  • Using detective control to identify misstatements via reconciliations and management review controls

One such example would be accounts payable automation to eliminate manual data entry. For instance, an OCR-based automation tool will improve receipt retrieval if there are recurring manual errors.

Account payable automation to eliminate manual data entry

Information and Communication 

Information and communication ensure that key stakeholders know their roles and responsibilities. It involves:

  • Defining expectations from each stakeholder in the financial reporting process
  • Educating employees on ICFR policies, procedures, and compliance requirements
  • Providing channels for reporting concerns and issues related to ICFR.

An example would be communicating reimbursement policies to manage company spending. These rules set clear limits and expectations for employees. 

Hence, if the policy says entry-level employees can't claim travel expenses, they should not submit such expenses for reimbursement.

Monitoring Activities

Monitoring activities involve regular review of financial controls and processes to identify and rectify issues. It includes the following steps:

  • Review expense reports, receipts, and other data to verify the accuracy.
  • Test sample data to ensure that controls are operating as intended.
  • Detect unusual patterns or anomalies in the data.
  • Verify that employees are following established policies and procedures.

One such example would be reviewing travel expense reports as a part of expense management. It involves verifying receipts and approval compliance. Any detected exceptions trigger investigations and corrective actions.

A Better Way to Manage Internal Control Over Financial Reporting

Setting effective policies for ICFR requires financial data visibility and proper reconciliation processes. Hence, achieving this demands more than policies and procedures. 

You need software to support operational efficiency transformation. Here is how Pluto offers a helping hand to get better control over your ICFR efforts: 

Seamless Financial Reporting 

Real time financial reporting with Pluto

Pluto generates detailed financial reports, providing more accurate and effective financial reporting. You can automate the process of data entry with OCR-based receipt capture. This reduces the manual errors and ensures accuracy. 

A multi-layer approval workflow ensures that financial transactions are reviewed and authorized on time. This helps you comply with company policies, enhancing control and accuracy.

The seamless integration with accounting software provides real-time data sync. This keeps the data up-to-date, enabling faster report generation.  

Simplify Financial Audit 

Simplify financial audit with Pluto

Pluto centralizes financial data, enhancing auditing capabilities.

Document management becomes simple with the easy uploading and retrieving of financial records. You can bulk download all audit logs and supporting files in a single click. This eliminates the time-consuming task of searching for and gathering individual paperwork. 

Pluto's automated systems keep expense records for all financial transactions. As a result, auditors can trace every step of the transaction, ensuring transparency and accuracy.

With end-to-end encryption, Pluto meets bank-grade security standards to safeguard sensitive financial information. This ensures the safety and easy accessibility of financial data. 

Accounts Payable Automations 

Automate your accounts payable

Pluto automates the accounts payable (AP) process to simplify procurement and payments. From purchase request (PR) to goods received notes (GRN) matching, you can streamline the entire AP process. 

Multi-layer approval workflows accelerate purchase requests and approvals. The purchase order (PO) process becomes faster with custom workflows and ERP integration. 

Pluto automates the entire invoice management process. OCR technology makes it easy to capture and auto-fill invoice details, ensuring accuracy and speed.

Pluto's cash flow management features provide alerts for upcoming payments. This enables you to schedule payments and avoid penalties. 

Budget Control 

Advanced budget control with Pluto

Pluto enables budget control by facilitating spending limits and approval workflows. 

Not only can you decide the limit for corporate cards, but also reject an expense if it goes against company policies. In contrast, you can also approve the spending limit for legitimate expenses.  

This ensures that employees adhere to predefined budgets. Moreover, this gives your finance teams immediate visibility into spending against budgeted amounts. 

ERP Integration  

Integrate your ERP with Pluto

Pluto's ERP integration streamlines vendor management and fosters an efficient control environment.

It imports vendor lists from your ERP and exports them back. This reduces data discrepancies and duplicates, leading to data consistency.  

Pluto's dashboard further makes tracking invoices and payments straightforward. This simplifies the payment and reconciliation process, preventing any errors. 

Expense Management  

Expense management with Pluto

Pluto automates and simplifies expense management processes. 

Each expense prompts a WhatsApp notification for employees to upload receipts. Administrators and managers also receive notifications to approve expenses. Approved expenses get reimbursed immediately to employees' bank accounts.

This seamless approval workflow ensures proper control and accurate financial reporting. 

Go Beyond Statutory Obligations

ICFR is not just a legal compliance. It is a practice to ensure financial visibility and control. While implementing policies and procedures is the main focus, finding the right tools to support your journey will make the process easier.

Pluto automates your financial processes to reduce manual errors and accelerate reconciliation. You close books 10X faster with more confidence. 

Book a demo today, and see how Pluto gives you better control and visibility from day one!

5
All
Procurement
December 20, 2023

Vlad Falin

Procure-to-Pay Process: What it is, Benefits, and Steps Involved

The procure-to-pay process doesn’t mean the procurement process. It is a subset of procurement that integrates purchasing and accounts payable.

Traditionally, the procurement process is scattered across the business, and the procurement team needs help to gain visibility or control. The employees purchase from different vendors, the approval process is chaotic and delayed, the stakeholders are stuck in email threads to review the expenses, and the procurement team struggles to get an overview of the organization’s needs.

Procuring the best goods and services becomes problematic since the team is left with open information loops. As a result, it spends more time optimizing the procurement cost and improving the bottom line.

What is the Procure-to-Pay Process?

The procure-to-pay process streamlines the scattered procurement parts to combine purchases and payments. Instead of a process spread across different software, the procurement process shifts to a centralized platform.

The employees get a dedicated platform to raise purchase requests and obtain approvals. The platform notifies stakeholders, such as managers, legal teams, finance teams, IT teams, and other relevant decision-makers to review and approve the proposals. As a result, the procurement team seamlessly moves to the vendor evaluation and negotiation stage without worrying about approvals or delays. The finance team efficiently handles accounts payable since the purchase and payment process is integrated.

So, while earlier, the purchases were handled solely by the procurement team and payments solely by the finance teams, the procure-to-pay process gives both teams an overview of the process from start to finish. In this post, we will discuss how this procure-to-pay process helps you optimize your procurement function and improve your bottom line.

Why Do You Need a Procure-to-Pay Process?

The procure-to-pay process is not just for your finance team or procurement team. It helps the entire organization to gain resources efficiently. Here are eight ways that demonstrate how moving to a streamlined process benefits you:

1. Visibility

All the relevant stakeholders get visibility into the process and the status. Be it the employee, managers, finance team, legal team, IT team, or procurement team — each one can track the progress without delving into multiple email threads. Additionally, teams get insights that help procurement teams optimize costs with data-driven decision-making.

2. Compliance and Control

You can implement advanced controls, such as customized approval workflows and spending budgets, without micromanaging the teams. You can successfully enforce internal control over financial reporting without creating unnecessary team resentment. 

So, for instance, if any expenses or purchases beyond $50,000 require additional approval from the legal and IT team, you can easily configure those controls within the approval workflow.

3. Streamline Workflows

The traditional process demands the employees to go from one office to another or spend days on email and Slack conversations before the managers give the green signal. At times, approval of a critical stakeholder is missed, causing delays and disrupting the workflow.

With the procure-to-pay process, you can create custom workflows depending on the purchase category, department, amount, etc. This accelerates workflow, and all the relevant stakeholders get notified right away.

4. Centralized Management

The procure-to-pay process integrates purchases and payments to bring all the critical information on a single dashboard. As a result, any discrepancies in the procurement process are identified in minutes. The entire procedure accelerates the real-time visibility of each stage.

5. Reconciliation

A centralized management system makes collecting and storing documents easy; additionally, since it integrates purchases and payments, the information syncs across accounting systems and ERPs.

During the audit season, this becomes a blessing where the finance team doesn’t have to chase teams for complete records. Also, it becomes easier to store and lock all the transactions and share these records with external parties.

6. Risk Management

The procurement operation is prone to financial, operational, and reputational risks. With the procure-to-pay process, teams can efficiently manage the vendors, purchase requests, approvals, and payments on a centralized platform in real time. It reduces the risk of fraud, ensures policy compliance, and provides visibility into spending patterns without burdening any team.

7. Insights

You can easily see the inside out of your procurement process, whether you want to know how much the marketing team spends or which vendor costs you the most. It makes it more convenient to reduce procurement costs and optimize purchases to improve the bottom line. Also, as all the information is centralized, there are no gaps or missing loopholes, providing complete transparency of your expenses.

8. Invoice Management

The procure-to-pay process ensures that all the invoices are captured and extracted into a centralized platform. This facilitates two-way and three-way matching without causing delays. Moreover, the reconciliation process becomes easy as all the records are systematically recorded.

So, whether you receive an invoice via email, WhatsApp, or physical copy, you can easily add it to the system without risking losing an invoice.

What are the Stages in the Procure-to-Pay Process?

The traditional procurement process has over nine steps strewed across different platforms. These include identifying goods and services, purchase requests, vendor selection, negotiation, purchase orders, inspection of the goods received, three-way matching, approvals, and payment and reconciliation.

While the procure-to-pay process doesn’t alter these stages, it integrates them for a streamlined workflow. So, earlier, if the approvals took days or weeks, keeping employees and the procurement team on hold, now it only takes a few minutes or hours. You centralize the procurement process and save money and time.

Here are five key stages in the procure-to-pay process:

1. Purchase Request

Purchase Request

Employees no longer need to travel from one office to another, seeking approvals manually from managers. The streamlined procure-to-pay process gives employees a centralized dashboard to raise requests and specify their needs. It helps the procurement team to understand what the employee needs as well as examine the purchase details. Moreover, the stakeholders can quickly approve or reject the requests from the dedicated platform.

Administrators add customized approval flows to enforce internal policies. They create trigger-based approval workflows based on the expense amount, category, and department to accommodate intricate hierarchies.

For instance, they have the option to create separate workflows for expenses below $5000 and those exceeding a certain budget. Similarly, they can add specific stakeholders to the custom workflows for minimum friction and delay. 

2. Purchase Order

Purchase order

While the vendor evaluation, selection, and negotiation happen on dedicated ERPs, the procure-to-pay process enables you to bring all this information on a consolidated platform. You maintain a synced and consistent database to make purchases faster and more secure.

Pluto integrates with your ERPs and allows you to maintain a centralized vendor database. You can add the vendor directly to the platform and systematically record information. You can add a field in your approval workflow to determine whether the employees are purchasing from a vendor list or a new vendor.

A systematic list helps you consolidate expenses and optimize costs. Moreover, ordering becomes more accessible with a unified platform for raising and approving purchase requests and maintaining an ERP-synced vendor database.

3, Invoice Management

Invoice Management

Traditionally, vendors send invoices to a dedicated email or an address. The employees send them for approval and payment. It takes days to clear the expenses. Additionally, the accounting team spends considerable time and energy on maintaining records.

The procure-to-pay strategy reduces this effort and streamlines the procedure. It captures and extracts the invoice from the emails and attaches to a dedicated purchase request and order. This helps the teams match the purchase order, invoice and goods received note (GRN) without juggling multiple platforms.

It pulls all the information with optical character recognition (OCR) technology, reducing manual data entry. Since this platform syncs with the accounting system, the accounting team spends minimal time on data entry.

4. Payment Processing

Payment Processing

Processing payments becomes a task when the finance team has to chase employees for invoices and wait for approvals and verification. The procure-to-pay technique centralizes the entire process, giving real-time visibility and helping finance teams make timely payments. 

Moreover, with Pluto, you can integrate your procurement software with the payment gateways to ease the payment process further. Also, you get better Forex rates than banks, helping you save more money. Overall, with the approvals and invoices streamlined, payment processing becomes easy.

5. Reconciliation

Reconciliation

Reconciliation is the hardest part, even when you perform the data entry and data sync monthly. You risk losing documentation and creating gaps in the records.

The procure-to-pay process consolidates the entire procurement cycle to bring all the critical information on a single platform. There are minimal gaps; records are up-to-date due to real-time tracking and recording.

With Pluto, you can integrate with platforms like MS Dynamics, Oracle Netsuite, QuickBooks, etc. So, with your ERPs and accounting software synced, you can easily record all the transactions digitally and securely.

Pluto further enables you to lock the transactions to avoid fraud once approved. Moreover, you can create view-only access for your records to simplify auditing for external parties.

Improve Your Bottom Line With the Right Procure-To-Pay Solution

Overall, the procure-to-pay process helps you automate your procurement process without changing your approach too much. You just need to find the right solution that assists your procurement process. 

We discussed more about this in our procure-to-pay solutions post, where you will find what procure-to-pay software does and how to pick the right one.