What is Procure-To-Pay (P2P)?

Procure-to-Pay (P2P) is the process of acquiring, receiving and managing goods or services from external suppliers. It involves a variety of activities, such as purchase order creation, supplier selection, invoice processing and payment. This type of system helps streamline the procure-to-pay process for businesses by providing a single platform to manage all aspects of the supply chain. In this article, we will discuss what Procure-To-Pay (P2P) is and why it’s important for companies to implement a P2P system. We’ll also give you an overview of the different components that make up a successful P2P solution.

What is Procure-To-Pay (P2P)?

P2P is a business process that starts with the procurement of goods or services and ends with the payment to the supplier. The P2P process includes the following steps:

1. Procurement: The purchase of goods or services from an external supplier.

2. Receiving: The receiving of goods or services from the supplier.

3. Invoicing: The creation of an invoice by the supplier for the received goods or services.

4. Approval: The approval of the invoice by the relevant decision maker(s) within the organization.

5. Payment: The release of payment to the supplier for the approved invoice amount.

How Does P2P Work?

P2P is a process whereby buyers purchase goods or services directly from suppliers, without going through a third-party intermediary. This type of transaction is often used in business-to-business (B2B) settings, as it can help to reduce costs and improve efficiency.

In a P2P transaction, the buyer and supplier will typically agree on a price for the goods or services being purchased. Once the transaction is complete, the buyer will make payment directly to the supplier. This type of arrangement can be beneficial for both parties, as it can help to save time and money by eliminating the need for an intermediary.

There are some risks associated with P2P transactions, however. For example, if the buyer does not make timely payment to the supplier, this could put strain on the supplier’s cash flow. In addition, P2P transactions are not always transparent, which can make it difficult to track spending. As such, it is important that buyers and suppliers have a clear understanding of the terms of their agreement before entering into a P2P transaction.

The Benefits of P2P

There are many benefits of P2P, including:

1. Cost savings – P2P can help reduce costs by streamlining the procure-to-pay process and eliminating paper invoices.

2. Increased efficiency – P2P can automate many manual tasks associated with the procure-to-pay process, resulting in increased efficiency and productivity.

3. Improved compliance – P2P can help improve compliance with internal policies and external regulations.

4. Enhanced visibility – P2P can provide greater visibility into spending, helping organizations to make more informed decisions about their procurement processes.

The Drawbacks of P2P

There are a few key drawbacks to P2P that are important to consider before implementing this type of system. One such drawback is the potential for fraud and abuse. When payments are made directly between two parties, there is a greater risk for fraudulent activity. Another drawback is the lack of transparency and control. With P2P, it can be more difficult to track spending and ensure that invoices are being paid on time. This can lead to late payments and other financial issues.

Are There Any Alternatives to P2P?

An organization’s procure-to-pay process (P2P) can be defined as the set of activities and tasks associated with acquiring goods and services from external suppliers.

The first step in a P2P process is requisitioning, in which the need for goods or services is identified. Next, purchase orders are created and sent to suppliers. Once goods or services are received, they must be inspected and approved. Finally, invoices are generated and payments are made to suppliers.

While the P2P process may seem straightforward, there can be many challenges associated with it. For example, organizations may struggle to find the right supplier for their needs, or they may have difficulty managing supplier contracts. In addition, P2P processes can be time-consuming and resource-intensive.

Fortunately, there are several alternatives to traditional P2P processes that can help organizations overcome these challenges. For example, eprocurement platforms can be used to streamline the requisitioning and purchase order creation process. In addition, supplier relationship management (SRM) tools can help organizations manage their supplier contracts more effectively. Finally, electronic invoicing (e-invoicing) solutions can automate the invoice generation and payment process.


The Procure-To-Pay (P2P) process is an automated system that helps businesses streamline their purchase cycle. With this type of solution, companies can manage their purchasing and payment needs in a much more efficient manner while saving time and money. By leveraging the power of automation, organizations can take control of the procurement process to ensure greater accuracy and improve overall productivity. If you are looking for ways to optimize your P2P operations, then consider implementing a comprehensive procure-to-pay platform today!

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