Source To Pay in Procurement – The Ultimate Guide

By The oboloo Team

Source To Pay in Procurement – The Ultimate Guide


In today’s procurement landscape, many organizations are turning to source-to-pay (S2P) solutions to gain visibility, control and efficiency in their supply chains. It’s no wonder why; S2P can help boost profits, reduce paperwork and improve compliance—all while streamlining the entire procurement process. But what exactly is source-to-pay, and how can you start leveraging it in your organization? This blog post is the ultimate guide to source-to-pay in procurement. We’ll cover everything from the basics of S2P to the benefits and challenges associated with it. Let’s dive in!

What is the Source To Pay Process?

The Source To Pay process is the end-to-end process of managing and paying for goods and services procured by an organization. It begins with sourcing (identifying and selecting suppliers) and ends with payments (managing invoices and payments to suppliers). In between, there are a number of important steps, including:

1. Contract management: Creating and maintaining contracts with suppliers
2. Order management: Placing orders with suppliers and tracking delivery
3. Invoice management: Receiving and processing invoices from suppliers
4. Spend analysis: Tracking and analyzing spending on goods and services
5. Supplier performance management: Monitoring supplier performance and addressing any issues

The Different Types of Source To Pay

There are a few different types of sources to pay when it comes to procurement. The most common are:

1. Purchase Orders: A purchase order is an official document that is issued by a buyer to a seller. It details what the buyer wants to purchase, how much they are willing to pay, and any other relevant instructions.

2. Contracts: A contract is a legally binding agreement between two or more parties. In procurement, contracts are often used to establish the terms and conditions of a purchase.

3. Invoices: An invoice is a document that is issued by a seller to a buyer for goods or services that have been provided. It will detail the cost of the goods or services, as well as any applicable taxes.

4. Credit Cards: Credit cards can be used to pay for goods or services from almost any type of supplier. When using a credit card, it is important to be aware of any fees that may be associated with the transaction.

5. Paypal: Paypal is an online payment system that can be used to pay for goods or services from many different types of suppliers. Paypal can also be used to send money between individuals

Pros and Cons of Source To Pay

When it comes to procurement, there is no one-size-fits-all solution. Source To Pay (STP) is a comprehensive and integrated solution that can offer many benefits for organizations, but it also has some potential drawbacks. Let’s take a closer look at the pros and cons of STP:


1. Increased Efficiency: STP can help organizations streamline their procure-to-pay process, resulting in increased efficiency and cost savings.

2. Improved Visibility: With STP, organizations have greater visibility into their spend, suppliers, and contracts. This can help identify areas of waste and potential risks.

3. Enhanced collaboration: STP solutions often include features that facilitate collaboration between buyers and suppliers. This can lead to improved communication and stronger relationships.


1. High Implementation Costs: Implementing an STP solution can be costly, particularly for larger organizations with complex procurement needs.

2. Change Management Challenges: As with any major change initiative, implementing STP can present challenges in terms of change management. Organizations need to ensure that all stakeholders are on board with the project and that proper training is provided to users of the system.

3. Potential for Vendor Lock-In: Some STP solutions may require the use of specific vendors or products, which could lead to vendor lock-in down the road. Organizations should carefully evaluate their options to avoid this pitfall

How to Implement Source To Pay

In order to implement source to pay, there are a few key steps that need to be taken. First, you need to identify all of your organization’s spend categories and establish what the ideal state for each would look like. Once you have a clear understanding of your current state and where you want to be, you can develop a strategy for how to get there. This strategy should include both short-term and long-term goals as well as a plan for how you will measure success.

Once you have developed your strategy, it is time to start implementing it. One of the first things you will need to do is establish contracts with your suppliers. These contracts should outline all of the terms and conditions of the relationship as well as specifying what is expected from each party. Once these contracts are in place, you can begin working on optimizing your processes. This may involve automating certain tasks or introducing new technology solutions. As you make changes to your processes, it is important to track the results so that you can continue to improve over time.

Source to pay can be a complex undertaking, but by taking the time to develop a comprehensive strategy and then systematically implementing it, you can achieve great results for your organization.

Best Practices for Source To Pay

There are a number of best practices that can be followed when implementing a Source To Pay solution in procurement. Here are some of the most important ones:

1. Define the business requirements for the Source To Pay solution.

2. Work with stakeholders to understand their needs and expectations.

3. Select a Source To Pay solution that meets the business requirements.

4. Implement the Source To Pay solution according to best practices.

5. Train employees on how to use the Source To Pay solution.

6. Monitor and optimize the use of the Source To Pay solution on an ongoing basis.”

Automated Source-to-Pay

Automated source-to-pay is a procure-to-pay process in which the entire process is automated, from requisition to payment. This means that there is no need for manual intervention at any stage of the process. Automated source-to-pay can be achieved through the use of procurement software, which automates the various stages of the procure-to-pay process.

The main benefits of automated source-to-pay are that it can save time and money, and improve visibility and control over spend. An automated system can also help to reduce human error and improve compliance with procurement policies.

What is S2P in procurement?

Source to pay (S2P) in procurement is the process of procuring and paying for goods and services. It includes everything from sourcing and purchasing goods and services, to receiving and paying invoices.

The S2P process can be divided into four main stages: sourcing, purchase, payment, and settlement. Each stage has its own set of activities and objectives.

Sourcing: The sourcing stage of S2P involves finding suppliers that can provide the goods or services that you need. This includes identifying potential suppliers, negotiating contracts, and awarding business to the selected supplier.

Purchase: The purchase stage of S2P involves placing orders with suppliers and managing the receipt of goods or services. This includes issuing purchase orders, tracking deliveries, and reconciling invoices.

Payment: The payment stage of S2P involves paying suppliers for the goods or services that they have provided. This includes issuing payments, managing dispute resolution, and maintaining records of payments.

Settlement: The settlement stage of S2P involves closing out contracts with suppliers and ensuring that all payments have been made. This includes finalizing invoices, cancelling orders, and terminating contracts.

What is the Source-to-Pay process

The Source-to-Pay process (S2P) is the end-to-end process that procurements organizations use to manage the sourcing, contracting, and purchasing of goods and services.

The S2P process begins with sourcing, which is the process of identifying and selecting suppliers who can provide the goods or services that an organization needs. Once a supplier has been selected, the organization will enter into a contract with the supplier. The contract will specify the terms and conditions under which the supplier will provide the goods or services.

After the contract has been signed, the organization will purchase the goods or services from the supplier. The purchase may be made through an internal purchasing system, or it may be made directly from the supplier. Once the purchase has been made, the organization will receive and use the goods or services that were procured.

The S2P process is a critical part of procurement management, as it ensures that an organization obtains the goods and services that it needs in a cost-effective manner.

Benefits of Source to Pay?

When it comes to procurement, there are many benefits to using a Source to Pay solution. Perhaps the most obvious benefit is that it can help you save time and money. By automating the procure-to-pay process, you can eliminate manual tasks and paper-based processes, which can help you achieve cost savings. In addition, a Source to Pay solution can help you improve visibility into your spend, gain greater control over your spend, and improve compliance with policies and procedures.

What is Source To Pay software?

Source To Pay software, also known as S2P software, is a tool that helps organizations manage their procure-to-pay process. This type of software typically includes modules for spend analysis, contract management, supplier performance management, and e-invoicing.

S2P software can help organizations improve their procurement processes by providing visibility into spending patterns, automating manual tasks, and streamlining communication between buyers and suppliers. By reducing the time and effort required to manage the procure-to-pay process, S2P software can help organizations save money and improve supplier relationships.

Source to Pay (S2P) vs. Procure to Pay (P2P)

There are two primary types of procurement process: Source to Pay (S2P) and Procure to Pay (P2P). Both have their own advantages and disadvantages, so it’s important to understand the difference between them before making a decision.

S2P is a more centralized approach, in which the Procurement department is responsible for both sourcing and paying for goods and services. This can be advantageous because it allows for better control over spend, but it can also be more difficult to manage. P2P, on the other hand, is a decentralized approach in which each department is responsible for its own procurement. This can be more efficient, but it can also lead to higher levels of spending.

So, which is right for your organization? It really depends on your specific needs and goals. If you’re looking for better control over spending, S2P may be the way to go. But if you’re looking for a more efficient procurement process, P2P may be a better option.

Source To Pay software benefits

Source To Pay (S2P) software provides a number of benefits for procurement organizations. Perhaps most importantly, S2P solutions can help organizations to automate and streamline their procure-to-pay processes. This can lead to significant efficiency gains and cost savings, as well as improved compliance with internal policies and external regulations.

In addition, S2P software can provide visibility into an organization’s spend, helping to uncover hidden costs and opportunities for savings. S2P solutions can also help procurement teams to manage supplier relationships more effectively, improving performance and driving better value from suppliers.


Source to pay in procurement can be a complex landscape. But with the right guidance, you can navigate it successfully and get the most out of your procurement process. This guide has covered all the key areas of source to pay in procurement from understanding the different stages involved to how technology can help improve processes. With this knowledge, you’ll have a better idea of how best to move forward with your procurements for maximum efficiency and results.

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