Tackling the Purchase to Pay process: How to!

Tackling the Purchase to Pay process: How to!

Each project starts with different objectives, yet many similarities can be found between them. For example, the objective at the food organization was to get the proliferation of indirect spend under control, at the construction organization to reduce administrative costs, and at the healthcare organization to increase efficiency across the entire P2P process. You can see that there is a commonality that all the objectives revolve around efficiency, and Yvo explains that there is often a lot of opportunity there in every organization.

Implementation

Yvo is active in different roles during a project, for example as a project leader at the construction and food organization and as a specialist at the healthcare organization. The project team included representatives from IT, procurement, accounts payable and sometimes a technical implementation consultant from the application vendor. When I ask Yvo what composition leads to the best outcome, he says that ''the most successful P2P teams are multidisciplinary teams where operational procurement and invoice processing fall under one manager. Then the responsibility lies in the chain instead of per department and the decision about the chain can be made by one person.''

At the healthcare organization, the project began from the need to replace a system. Three different systems, one for procurement, one for invoice processing and one for contract management, were being used at the time. Proactis was eventually chosen because of its integrated solution that delivers a major efficiency hit to the process, increases ease of use and reduces the management burden. This was not possible in the old situation due to the use of different systems. Yvo explains that ''the starting point should be that you go to one application, but of course it may be that this is not feasible. For example, when you have a large ERP package in the organization, sometimes it is better to choose to use an available solution from them.''

This was the case at the food organization, where they chose to run the direct spend through the ERP system and only the indirect spend through the P2P application Proactive. During this project, the main goal was to get the indirect spend under control, which was an objective from the finance department where the manager was also the client. The objective from finance led to a composition of the P2P team without a representative from procurement, which did not benefit the project. This again showed that the composition of a multidisciplinary team is most desirable.

In the construction organization, the finance manager was also the client, only the project was designed differently. Here, a steering committee was used that made overarching decisions about the chain. To achieve the goal of reducing costs, this organization chose to make a system change from ISProjects to Basware.

Although the goals of the companies differed, all three organizations made the choice to implement a new application as a solution to achieve the goals. However, implementing this new application was not the only thing that ensured that the objectives were met. In fact, there were also a number of process changes that were implemented. For example, pre-approval on an order instead of when the invoice is already in, or making the creation of new suppliers less attractive so that the orderer gets to contracted suppliers faster. Yvo says of this that ''it's a simple process change that ensures that money is spent with the right party'' Immediately afterwards, Yvo says that it's a simple change on paper, but that implementation is very dependent on the willingness to change of the people involved.

Yvo states that ''people, systems and processes'' should always be looked at together to determine an approach and achieve objectives. ''Without good and the right people, it becomes very difficult to implement a system or make process changes and thus achieve your goals.''

''What is generic about my approach is the drive to have both sides of the spectrum, procurement and finance, at the table at the same time. My role in that is to make sure they are both at the table, and understand from each other that a change on one side has consequences for the entire process. So it's not about the best solution for finance, not the best solution for procurement, but the best solution for the P2P process.''

P2P & Data

During each of Yvo's P2P projects, data plays a major role. When asked what is the role of data in a P2P project, Yvo replies ''That is twofold. Data drives the project and determines the success of your project.'' At the beginning of the project, data provides a picture of the maturity of P2P process, and thus guides the course you will take during the project. In addition, the success of your project can be measured by making smart use of the available data.

Yvo has experienced different levels of maturity in the P2P process. When using a P2P application, there is generally more process information available, than when using data from an ERP system, for example. With the data from a P2P application, Finext can apply process mining better because the organization already has a lot of capture.

During the projects in the healthcare and construction organization, there was a ''desire to achieve more automatic matching of invoices to orders and also to do the same or more work with fewer people. '' So indicators that are important during these P2P projects include the number of invoices per FTE (your processing capacity) and the 2 or 3 way matching (matching your PO invoices with orders). From the food sector organization, in addition to these indicators, there was also a focus on spend under contract (goods purchased from contracted suppliers). Yvo explains ''Grip on spend, that's what you want then''. These are generic indicators for every P2P project, no matter what organization you are in. Depending on the objectives, you then prioritize the KPIs you want to monitor during the project.

In addition to the generic indicators, Yvo also outlines a little side note on using data, ''Data is not sacred. It can also happen that the data shows that a process is very efficient with few approval steps, but outside people with a paper for signatures have been through the organization.'' Then there is no record of this process step being taken, even though it does affect the turnaround time from order to payment.

P2P & Automation

Right now you hear and read a lot about automation within P2P, what role do you think that plays in your projects? ''The biggest opportunities lie in having a good P2P application. When you have 8 to 9,000 invoices in an organization on an annual basis, it can already offer considerable optimization."

"In addition, I see a lot of potential in Robotic Process Automation (RPA) when you can't house your processes in one system. There you can cover a part that you can't just automate, so you can go from 80% optimization to 90% or 100%, for example, by deploying RPA.'' Examples of the application of RPA in P2P include creating fixed entries, mailbox processing for electronic invoices or reminders when you need to capture information in multiple systems, for example. Yvo sees this trend growing and gets more and more inquiries about using new technologies to set up the process as efficiently as possible.

Conclusion & Results

Finally, at the healthcare and food and construction organization, P2P applications were successfully implemented and are being used by both procurement and accounts payable. When asked when you finish a P2P project, Yvo immediately says ''Never! Haha!'' The goal is to work as efficiently as possible with perhaps 100% automated invoice processing without human intervention. In addition, everyone in the organization must be able to place an order, which requires some knowledge and experience from employees. So improving your P2P process is an ongoing process rather than a project with a beginning and an end.

I conclude the interview with my most pressing question, what are the ideal ingredients for a smoothly running P2P project. First, Yvo explains that there must be availability of resources, and by that he means a good project leader and good available people who are given time by the organization to contribute. ''This should obviously be part of basic hygiene, but too often I see that this is not the case''. Second, he mentions having a clear goal in mind. Without having well defined what you are working toward as a team, whether this is toward certain KPIs or toward a certain situation, no P2P project stands a chance of being successful. He concludes with an innovative ingredient. If you really want to optimize your P2P process towards 100% automated invoice processing, you will (also) have to start using more innovative methods such as RPA than just a P2P application.