Procure-to-Pay (P2P)

The controller and the finance department are critical links in a company’s supply chain. As such, they can play a strong role in ensuring cost-effective supply chain management, says Keith D. Dabbs, MBA, CMRP, APM, Senior Manager of Procurement and Sourcing at Riverside Health System, a healthcare company that has earned awards for supply-chain management excellence.

“The controller’s awareness of the supply chain enhances the … Read More

If you are grappling with the costs and inefficiencies of time-consuming and inefficient processes, it may be time to take a closer look at what automation can do for your P2P operation. 

Automation can promote better supplier relationships, establish service level agreements, and help you better manage your relationships with suppliers. Technology can also assist in negotiating better contract terms and prices, creating improved visibility,… Read More

By Brian Rosenberg

Let’s examine the point of view of the procure-to-pay process from the perspective of each of the players to better understand the objectives of each operation and how they view the other.

The View from Purchasing

Purchasing departments are focused on one primary objective, to buy the product requested as quickly as possible at the best possible price. They are often measured by their ability to respond to requisitions an… Read More

Financial operations professionals seeking effective ways to achieve improvement in terms of accurate and speedy vendor payments, error-free transactions, and value-added vendor relationships would do well to focus on aligning AP with purchasing, according to Penny Weller, PhD, CMA, Senior Director, North American Advisory Practice Leader, Global Business Services, The Hackett Group.

Weller has many years of experience in AP and other finance are… Read More

As technology and business requirements evolve, the Procure-to-Pay (P2P) cycle needs to be revisited from time to time by Purchasing and AP to ensure it is meeting both internal needs and the needs of suppliers.

Specifically: a P2P improvement team should be formed to:

  • Define the roles and duties of the people involved in the P2P process;
  • Develop training. Employees …
  • Read More

A common myth about purchasing cards (P-cards) is that they are easy targets for fraud and employee misuse. The pervasiveness of this myth may have convinced some organizations to resist their use.

The reality is that purchasing card programs are highly reliable. The most recent IOFM P-card survey reveals that only 27.7 percent of respondents have ever witnessed misuse and just 16.9 percent have ever been victims of fraud (see Exhibits 1 and 2).… Read More

Does it ever feel like AP and Procurement don’t speak the same language? You’re not imagining things.

Often, issues as basic as “unit of measure” and “unit of price” can differ between the two functions, grinding the payables process to a halt and preventing the supplier from being paid.

Here are examples:

Unit of Measure… Read More — To manufacture bottles of pills, procurement orders 100,000 foil tops. But they don’t come as individual t
Last time… Read More, we explored how to match payment control channels to payment risk. The less the risk, the less rigorous the payment controls need to be. For example, for dealing with the risk of an unauthorized spend amount, a credit card solution might be sufficient. On the other hand, running out of stock in a manufacturing company is a business-critical risk, and is better managed through three-way matching or evaluated receipt settlement on the ba

In part 3 of this series, we discussed three-way matching and whether it’s consistently necessary. There are alternatives to streamline that process by eliminating one or more steps, depending on type of spend.

In this installment, we’ll take a more in-depth look at risk factors by spend category.

Step Four: Assessing the Impact and Probability of Risk

Read More

What’s worse than unauthorized spend or unearned payments? A lot, actually. To adequatel
This article is the third in a series based on a Hackett Group white paper entitled, “Defining a Source-to-Pay Channel Strategy that Balances Risk, Control and Efficiency.”

In Part 2 of this series… Read More, we talked about guided buying, a technique in which the number of options at each step of a source-to-pay cycle is reduced in order to simplify the end-to-end process. By reducing the number of possible permutations of transaction pathways from th

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