Delayed invoices. Stock shortages. Noncompliant purchases. Manual procure-to-pay (P2P) processes are prone to friction that bogs down finance teams. But emerging technologies are enabling a touchless approach to P2P that accelerates workflows, improves accuracy, and provides 360° spend visibility.
In this comprehensive guide, we’ll explore:
- The automation technologies transforming P2P
- Implementation approaches to consider
- Critical factors that ensure success
- FAQs about P2P and its automation
Let‘s dive in.
The Procure-to-Pay Process
Before exploring how to automate P2P, let’s quickly recap what exactly procure-to-pay entails.
Procure-to-pay encompasses all steps involved in obtaining goods or services and processing the associated invoices and payments.
Key stages include:
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Initiating purchase requests – Employees submit requests based on internal needs.
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Issuing purchase orders – The procurement team creates and sends formal POs to selected suppliers.
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Receiving shipments – Ordered inventory is delivered and checked against POs.
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Processing invoices – Suppliers issue invoices that must be received, reviewed and approved.
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Making payments – Finally, AP teams pay validated invoices by their due dates.
Managing these interlinked stages seamlessly requires extensive manual effort. But missteps lead to delayed payments, compliance issues, and wasted resources.
This complex, high-volume process is ripe for automation.
4 Technologies Set to Transform P2P
Innovations in robotic process automation (RPA), artificial intelligence (AI), and intelligent document processing (IDP) are powering the next wave of P2P automation:
1. Robotic Process Automation
RPA tools use software “bots” to mimic human actions. RPA excels at automating repetitive, rules-based workflows.
In P2P, RPA bots can execute tasks like:
- Submitting and approving purchase requests
- Sending POs to suppliers
- Importing invoices and capturing key details
- Reconciling shipments received to POs
- Initiating payments
By automatically handling high-volume, repetitive steps across the P2P process, RPA reduces manual workloads and minimizes error-prone data entry.
According to Deloitte, over 50% of companies already use RPA in some finance processes, with many achieving ROI in less than 12 months.
2. Intelligent Document Processing
Converting unstructured invoice data into actionable information remains a major bottleneck.
Intelligent document processing (IDP) solutions combine template matching, OCR, and machine learning to automate the extraction, validation, and routing of data from invoices, contracts, and other documents.
IDP enables touchless processing of incoming invoices:
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Data extraction – IDP software can accurately pull supplier details, invoice numbers, dates, line item data, totals, and more.
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Validation – invoices can be automatically matched against POs and receipts to verify accuracy.
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Routing – Based on extracted data, invoices are automatically sent to approvers.
This eliminates immense manual effort traditionally required to handle invoices.
3. Artificial Intelligence
Beyond automating simple rules-based steps, artificial intelligence adds decision-making capabilities that enable P2P systems to handle complexity. AI techniques like machine learning allow automation to adapt and improve over time.
AI powers next-level P2P automation such as:
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Sourcing analysis – predicting future demand, identifying pricing anomalies, and scenario planning to hedge supply chain disruptions.
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Anomaly detection – identifying duplicate or fraudulent invoices and suspicious transactions.
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Forecasting – projecting future cash flow needs and recommending optimal payment timing.
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Supplier identification – custom algorithms can nominate suppliers best matched to procurement needs.
The AI-enabled P2P system becomes a strategic advisor rather than just a digital clerk.
4. Generative AI
Emerging generative AI models like DALL-E and ChatGPT can generate original text, images, and code.
By analyzing past patterns, generative AI could enable P2P systems to:
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Auto-generate supplier communications – saving procurement teams from repetitive manual interactions.
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Produce status reports and spending summaries – personalized to each stakeholder‘s needs.
This futuristic technology holds incredible potential to eliminate procurement teams‘ most laborious manual work.
Monolithic or Best-of-Breed? P2P Automation Approaches
With these technologies at their disposal, how should organizations implement P2P automation? Two primary approaches exist:
Monolithic P2P Suite
Many large ERP vendors offer end-to-end P2P modules spanning the entire process. SAP Ariba and Oracle Procurement Cloud are leading examples.
These monolithic suites promise tight integration between modules like sourcing, procurement, invoice processing, and payments. However, they often struggle to keep pace with the latest innovations in intelligent automation.
Specialized Automation Technologies
Leading-edge vendors like Hypatos focus exclusively on AI-powered automation for P2P and other finance processes.
These specialized tools integrate with existing ERPs and P2P suites to complement their capabilities. The benefits are massive efficiency gains and faster ROI from automation technologies like IDP and AI.
Gartner predicts that by 2025, 75% of large organizations will shift to specialized automation solutions rather than monolithic suites. The flexibility, speed of innovation, and AI capabilities that independent vendors provide are compelling.
4 Keys to P2P Automation Success
Streamlining the complex procure-to-pay process via automation is certainly possible but requires careful planning and execution:
1. Take an Iterative Approach
Bite-size projects focused on pain points often prove more successful than a massive upfront overhaul. Target high-volume manual workflows first.
2. Integrate New Solutions into Existing Systems
Avoid siloed applications. Your P2P automation solution must integrate seamlessly into surrounding finance systems.
3. Maintain Continuous Improvement Culture
Regularly evaluate new automation opportunities via process mining and analytics. Update workflows to incorporate innovations like AI.
4. Manage Organizational Change
Provide ample training and communication to obtain user buy-in. Analytics dashboards can highlight automation benefits and keep stakeholders aligned.
What Results Can You Expect?
Organizations implementing AI-driven automation across procure-to-pay can expect significant benefits:
- 60-80% faster invoice processing with IDP and minimal manual intervention
- 55% lower procure-to-pay costs by eliminating manual labor and errors
- 3.2x higher P2P productivity through digitized workflows and approvals
- 57% improvement in on-time payments and supplier satisfaction
In addition to hard cost savings, automation provides valuable data insights, fraud reduction, auditability, and increased agility.
FAQs About Procure-to-Pay Automation
Let‘s answer some frequently asked questions about P2P automation:
What processes can be automated in P2P?
Routine manual workflows like PO and invoice creation, approvals, GL coding, matching, and reporting are top automation targets.
What are the main benefits of automation?
Increased efficiency, lower costs, fewer errors, improved analytics, and compliance.
What results can be expected?
Typical metrics improved by automation include invoice processing time and cost, payment cycle times, and supplier satisfaction.
How long does implementation take?
Gradual rollout focusing on high-impact areas first. Total transition to automated P2P averages 6-8 months.
What are key factors for success?
Iterative approach, integration, change management, using specialists like Hypatos for automation.
How do I get started?
Document current P2P workflows. Define goals. Assess automation opportunities. Build a business case.
Let AI Take the Load Off Your Team
Procuring and paying for goods and services is core to any organization. But manual P2P processes are slow, inefficient and error-prone.
New technologies like RPA, AI, and machine learning can automate these complex workflows for dramatic productivity gains, cost savings, and data insights.
Leading-edge solutions purpose-built for P2P automation, like Hypatos, deliver the most impact and value. By augmenting your existing systems with intelligent automation, you can optimize procure-to-pay and unlock your finance team’s full strategic potential.