How to build a collaborative Procure to Pay process
Procurement, meet Accounts Payable
By Michael Ryan, Partner Alliance Account Executive at Tradeshift
Procurement and Accounts Payable are to business what breathing is to people: an absolutely essential function that most of us only notice when something goes wrong.
Just as with breathing, some Procurement and AP problems can go undiagnosed for years, causing a number of barely noticed yet increasingly severe issues throughout the business.
One of the biggest hidden “health problems” for businesses is the disconnect between transactional Procurement and Accounts Payable (AP).
These departments should have a close, symbiotic relationship; however, they are often separated by an unscalable wall that hinders their effective collaboration.
This gap is often made deeper by a patchwork of disparate systems that prevent them from sharing vital insights and intelligence.
Without a unified platform, discrepancies between purchase orders and invoices can go unnoticed, leading to payment delays and strained supplier relationships.
Fortunately, a solution is in sight.
A new breed of digital Procure to Pay platforms, built for the mid-market, can help bridge the divide and ensure close collaboration between two departments, which, though they often go unnoticed, are critical to business success.
Why are Procure to Pay silos so common among mid-market companies?
Be honest: do the Procurement and Accounts Payable departments in your business work closely together?
Do they have common technology systems that enable them to share real-time insights and help the business as a whole?
If so, congratulations—you’re in an exclusive club.
Most businesses struggle to achieve effective integration and collaboration between these two departments, and many still don’t realise the importance of these capabilities.
This is particularly true for mid-market businesses, where resources are limited, and departments often still use outdated systems from when the organisation was different in size and structure.
Whether due to rapid growth, an acquisition, a change in focus, or another factor, mid-market firms often operate in a rapidly evolving environment.
As business needs change, pressure mounts on the processes that support your operations.
The idea of integrating procurement’s purchase orders and supplier relationships with AP’s world of invoices and payments might well be on a mid-market CFO’s wishlist.
They may look enviously at large enterprises with Procure to Pay (P2P)—integrated, end-to-end procurement systems, from ordering to invoice to payment—but conclude that it’s prohibitively complex and expensive.
Until very recently, they’d be right.
Procure to Pay solutions have not generally served the mid-market
Unlike large enterprises with the resources to invest in all-singing, all-dancing procure to pay solutions, mid-market businesses will be tempted to settle on a jury-rigged approach.
This can include manually entering data from purchase orders into the accounts payable system, reconciling invoices against purchase orders by hand, and manually tracking payment statuses.
These manual processes are time-consuming and prone to errors.
A missed invoice, a duplicate payment, or a discrepancy in the data can lead to financial inaccuracies, strained supplier relationships, and missed opportunities for cost savings.
Furthermore, the lack of real-time visibility into each other’s processes means that Procurement and AP can’t easily collaborate on strategic initiatives, such as negotiating better payment terms or optimising cash flow.
The Procure to Pay dilemma facing mid-market organisations
Growth increases the volume of transactions, the complexity of procurement needs, and the number of suppliers.
The lack of an integrated Procure to Pay solution means that Procurement and AP teams are constantly playing catch-up, trying to manage an ever-increasing workload with tools that are no longer fit for purpose.
Moreover, mid-market organizations often struggle to find flexible and scalable solutions that meet their evolving capability needs while integrating seamlessly with their existing systems.
Consequently, these organisations often face disappointing outcomes and inertia to change.
The turning point: embracing an integrated Procure to Pay solution
The turning point for mid-market companies comes when they recognize the need for a unified, integrated Procure to Pay solution – and that they can now benefit from technology solutions specifically designed for their market segment.
The emergence of unified, cross-business Procure to Pay platforms like Tradeshift is already transforming mid-market firms’ operations, helping them to slash processing times and boost accuracy while generating real-time data and intelligence that’s invaluable to every department.
These systems finally break down the silos keeping Procurement and AP apart, enabling them to work together seamlessly.
Purchase orders, invoices, and payment approvals are all managed within the same system, ensuring data flows smoothly from one process to the next.
This not only reduces the risk of errors and discrepancies but also provides real-time visibility into spending, enabling better decision-making.
Almost overnight, businesses are seeing conflict turn into collaboration, bottlenecks transform into straight-through processing, and cost centres transform into money spinners.
With a unified system, Procurement can easily track the status of purchase orders, monitor supplier performance, and collaborate with AP to ensure timely and accurate payments.
AP, in turn, benefits from streamlined invoice processing, automated invoice matching to purchase orders, and improved cash flow management.
Selecting a Procure to Pay solution: selection criteria for mid-market organisations
Solutions like Tradeshift have been designed with the needs of mid-market organisations in mind.
Here are some of the key areas we think set Tradeshift apart:
Seamless Integration: Tradeshift’s Procure to Pay solution integrates with any of your existing ERP and finance systems, allowing mid-market businesses to scale their operations without the hassle of complex integrations.
Scalable for growth: Tradeshift’s modular procure to pay platform scales with your business and lets you customize your digital transformation journey according to your needs.
Global network: Joining Tradeshift means connecting to a global ecosystem of over a million businesses in every corner of the globe. Buyers and suppliers of every size and stripe use Tradeshift to discover new suppliers, attract customers, and tap into new markets.
AI-powered: You’ve heard of ChatGPT; now meet Ada, Tradeshift’s AI platform embedded throughout the procure to pay process. Ada works alongside your team, automating time-consuming tasks, finding missing information, eliminating errors, and identifying approvers. She’s so good, in fact, that she’s able to reduce manual interventions on invoice coding by a massive 99.5%!
Global compliance: We do a lot at Tradeshift, but one thing we do especially well is global compliance. Our platform is engineered to make it easy for you to comply with tax and e-invoicing mandates anywhere in the world. We already offer compliance coverage in more than 70 countries, including China. Our proven process ensures that, regardless of where you do business, we’ve got you covered.
Rated by suppliers: Tradeshift is a business network that benefits both buyers and suppliers. Our experience shows that providing value is the best way to incentivize suppliers or customers to join your digital transformation. And with 80%+ supplier adoption rates – far exceeding the typical 10-20% – it works!
Superior customer support: From planning to implementation and beyond, Tradeshift provides extensive support to help organizations navigate the transition. This includes customer success and professional implementation teams that ensure successful outcomes, as well as generative AI-powered expert chatbots capable of handling a range of queries in real time.
The path to Procure to Pay efficiency
As Procurement and Accounts Payable come together through integrated P2P solutions like Tradeshift, the benefits extend beyond operational efficiencies.
The relationship evolves into a strategic partnership, where both departments work towards common goals.
They can collaborate on initiatives to optimize supplier relationships, negotiate better payment terms, and drive cost savings that benefit the entire organization.
For midmarket companies, bridging the disconnect between Procurement and Accounts Payable is a journey from silos to synergy.
By embracing integrated technology and breaking down the barriers that once kept them apart, these companies can unlock new levels of efficiency, collaboration, and growth.
With Tradeshift as their trusted partner, midmarket organizations can look forward to a future where procurement is as easy and unnoticed as breathing.
