Good organizational skills and management are of vast importance, regardless of what type of business you are running. The overall efficiency and productivity are what separates global giants and companies that are not that successful, and one of the biggest roles in achieving this goal is reserved for procure to pay process. Besides that, it’s also of vast importance to keep up with the latest flow of info, or in this case, to take advantage of early purchase and payment discounts, which is why we will focus more on that now and provide some tips on how to optimize your procure to pay process.
Find the right software and company
The starting point of any successful business is picking the right program and software along with choosing the right partner. The main goal here is to have the best possible and up-to-date procure-to-pay process. By having the best management system, all these problems are a thing of the past, as time is money in the modern business world. There are many stages of this process, and the software is there to help you guide those processes and to make sure they will be executed in a strict order. Besides that, what’s even more important is picking the right one for your business, and doing so might not be as easy of a task as it might sound because there are many of them available. Now, even the best software on the market cannot grant high results if the one using them is not well equipped or educated. That’s where experienced professionals step in, as here, they have a crucial role, and everything about that and more you can find if you click here.
Specify the needs
Every company is different, even those based on the same management structure and in the same line of business, which also means that every company has different needs. Now, this is where it all starts, and by defining the needs, you can set goals and organize and arrange everything regarding how to reach those goals for your company. By identifying business requirements, you get to a point where everything is set and ready, meaning that the procurement process can begin. Furthermore, the role of those in charge of the procurement process is to find and sketch the best specifications for services or goods, and also TOR, which stands for terms of reference for services, and SOW, statements of work.
Check the requisitions
Even though the name might confuse some, the point here is about determining whether there are enough funds and whether there is a genuine need for those goods or/and services that are requested. By knowing all the details and determining this, you can be sure that all the goods and services are obtained in the best possible manner and that with their approval, the company will not endanger its existence of the company. It is an important step because even the smallest mistake can have devastating effects on the company and its functioning.
Deciding to make the purchase and creating a purchase order
When it comes to making this important decision and choosing whether some purchase is a good choice or not and if it is okay to authorize it, it is the job of the whole team. This decision needs to be made based on the team’s opinion on whether something is necessary to buy or not, and what is even more important, whether there is enough money in the budget. Once this important dilemma is solved and the decision is made, it is time to create a purchase order, which represents one step closer to finalizing the purchase. As we have already mentioned, this order is made on the decision of the whole team and based on the requisition, and what is the most important, it is easy to create. It needs to be sent to the vendors, and you need to wait for their approval, so if they approve it, it is then the legal contract, and all the terms need to be fulfilled. Keep in mind that some vendors will make a few approvals from different teams, as they want to make sure that every detail in the purchase order is accurate and correct.
Checking the received products or services
After finishing with all the necessary documents and finalizing the purchase, it is time to receive ordered products or services from vendors. It is pretty important for each company to inspect them in detail and make sure everything is all right and exactly like it is stated in the purchase order. Since everything is written in the PO, it is not difficult to check if everything is okay, and since the PO is a legal contract, it is necessary to take some action if there are any irregularities. Of course, mistakes happen, and it is always the best idea to contact the vendor and check if they can be fixed, but if not, contact the lawyer, and everything will be solved.
Three-way match
One of the final steps of every purchase is a three-way match, and it is performed once the purchase is over and all the goods are inspected and approved. Regarding that, it is happening between the PO, suppliers invoice, and goods recipe, hence the name, and it is one of the most important procedures when it comes to purchasing. If there is a match, it is time for the finance team to pay the supplier, which is the final step of every purchase and, in most cases, the end of the PO contract.
To summarize
As you can see, procure to pay process consists of several steps, and understanding them is not as difficult as it might seem at first glance. The important thing is its optimization that can improve each company’s business, and what you need to know is if you want to do that, it is crucial to think about every step. Improving and optimizing each step will improve the whole process, and in the end, the company will get the maximum out of it.
