
Purchase-to-Pay
Purchase-to-pay is an integrated system that fully automates the goods and services purchasing process for a business. The system ends when payment is made. Purchase-to-pay is a complete purchase system for businesses from the purchase of goods to vendor payment. Purchase-to-pay is also called P2P, procure-to-pay, eProcurement, or req-to-cheque. The purchase-to-pay process A typical purchase-to-pay system includes five steps and requirements for completion: **Catalogs**: Catalogs from preferred suppliers are the first requirement in a purchase-to-pay system. **Purchase requisitions**: Once a product has been selected from a catalog, the buyer sends a purchase requisition to the appropriate manager. Rather, the goal of a purchase-to-pay system is to improve efficiency and financial controls since finance departments have timely purchasing data at their fingertips. **Invoicing**: This is a critical component of a purchase-to-pay system since manual processing of invoices is a hugely laborious and time-consuming process.

What Is Purchase-to-Pay?
Purchase-to-pay is an integrated system that fully automates the goods and services purchasing process for a business. The system earned its name because it handles all aspects of acquisition from the purchase of goods to the payment of the vendor. The key benefits to purchase-to-pay are efficiency, cost savings, and increased financial and procurement visibility.





Understanding Purchase-to-Pay
The purchase-to-pay system begins with requisitioning, proceeds to procurement, and ends with payment. Requisitioning is the process of formally requesting a service, item, or product with a purchase request form. Procurement happens when the goods or services are received. The system ends when payment is made.
Purchase-to-pay seeks to optimize the purchasing process, thereby benefiting the organization through better financial controls and efficiency. This streamlined, integrated system saves costs and reduces risk. A typical purchase-to-pay system includes five steps and requirements for completion:
Purchase-to-pay systems are not intended to speed up the payment process. While this would be a laudable objective, the reality is that it would not be a priority for most companies because paying bills faster would affect the timing of their own cash flows. Rather, the goal of a purchase-to-pay system is to improve efficiency and financial controls since finance departments have timely purchasing data at their fingertips.
Fast Fact
Purchase-to-pay systems are automated processes that reduce labor costs and increase accuracy.
Best practices for purchase-to-pay systems include solid technology that uses a single point of contact, such as a supplier portal, reduced complexity in catalogs and buying channels, and support from top management. It can provide key data on how much is being spent, what products or services are being received, and delivery times.
Related terms:
Accounts Payable (AP)
"Accounts payable" (AP) refers to an account within the general ledger representing a company's obligation to pay off a short-term debt to its creditors or suppliers. read more
Budget : Corporate & Personal Budgets
A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. read more
Cash Flow
Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business. read more
Efficiency
Efficiency is defined as a level of performance that uses the lowest amount of inputs to create the greatest amount of outputs. read more
Mergers and Acquisitions (M&A)
Mergers and acquisitions (M&A) refers to the consolidation of companies or assets through various types of financial transactions. read more
Procurement
Procurement is the act of obtaining goods or services, usually for business purposes. Procurement is most commonly associated with businesses because companies need to solicit services or purchase goods, usually on a relatively large scale. read more
Purchasing System
A purchasing system is a process for buying products and services encompassing purchases from requisition and purchase order through payment. read more
Requisition
A requisition is a documented request for an item to be delivered by a certain date. Read how requisitions work as part of the procurement process. read more
Supply Chain
A supply chain is a network of entities and people that work directly and indirectly to move a good or service from production to the final consumer. read more
Voucher Check
A voucher check, or remittance advice, is a combination of a check and voucher which includes pertinent information about that check's payment. read more