Procure-to-Pay (P2P) — also called Purchase-to-Pay — is the end-to-end business process of acquiring goods or services from an external supplier and completing payment. It covers everything from identifying an internal need to issuing a purchase order, receiving the goods, processing the invoice, and finalizing payment in the organization's financial systems.
When managed well, P2P gives organizations centralized control and full visibility over every transaction in the purchasing lifecycle.
Within any large organization, the P2P process consists of many steps, and there are as many ways of doing the P2P process as there are organizations.
Still, there are some main steps and best practices to follow:
Let's take a close look at each of the steps of the process.
This step sets the foundation for the entire procurement process. When the organization recognizes a need for goods or services according to its business requirements, it needs to identify quantity, quality, and the timeframe for delivery. When planning is done right, it will lay the foundation for efficient and cost-effective purchasing decisions.
To find the right supplier with the right offer and price, thorough research needs to be done, both online and through talking to different suppliers, gathering information about pricing and reputation. Also, making comparisons of different supplier´s offerings and terms of service is an important part of this step. The goal is to find a supplier that offers the best deal while balancing cost, quality, reliability, and compliance with the organization's standards and requirements.
When the supplier has been chosen, a purchase order (PO) is issued and sent to the supplier. The PO acts as a legal agreement between the supplier and the buyer, outlining important details such as types and quantities of items, pricing, delivery schedules, and payment terms.
Upon receiving the goods or services, they need to be verified internally and matched to the specifications outlined in the PO. This step includes a certain degree of QA, as it is crucial to check the quality, quantity, and other criteria to ensure that the delivered goods or services meet the agreed-upon standards and requirements.
The supplier issues an invoice, and upon receiving the invoice, it will proceed through the internal workflow that leads to payment. This process for inbound invoices consists of several steps, the first being a cross-reference against the PO and the received goods or services, to ensure that the details are correct before the payment is processed.
After being checked, the invoice is sent for approval. Usually, a designated person within a specific department must approve the invoice. Sometimes, more people need to approve, and this complicates the process. This step approves that the invoice is accurate and that the goods or services have been satisfactorily delivered.
The organization's accounts payable department processes payment of the approved invoice, and makes sure the invoice is paid according to the terms in the purchase order.
The supplier gets paid, and the transaction is finalized.
The final step of the P2P process is documentation of all details of the transaction – from PO to delivery, invoice, and payment. Usually, this is done in the company's ERP (Entreprize Resource Planning) system, enabling tracking and management of expenditure. Also, providing all this information in the ERP system provides a transparent audit trail for future reference.
A well-managed P2P process helps organizations:
Yes. The P2P process is well-suited to automation. Modern P2P software can handle purchase order creation, invoice matching, approval routing, and ERP documentation with minimal manual intervention. Despite this, many organizations still rely on manual, paper-based workflows — introducing delays, errors, and compliance risk.
Automating P2P reduces processing time, lowers the risk of human error, and gives finance teams real-time insight into spending.
Do you want to make Procure-to-Pay simpler and more efficient? Download our free eBook and learn everything about P2P from A to Z. Discover how to automate processes, which KPIs to monitor, and the latest trends you need to know.