Modernize purchase to pay

Positioned at the intersection of business strategy and value, finance can spearhead the discovery of insights that facilitate faster, better decision-making for its organizations.

Yet nearly half of the finance department’s time is still spent on transactional activities. In fact, fewer than 10% of activities are dedicated to analysis and action—areas crucial to supporting improved decisions. Finance teams need to free time so they can drive greater value for their organizations.

Exponential technologies are the key. They can deliver efficiencies and cost savings within core processes, such as purchase-to-pay (P2P), also known as the procure-to-pay process.

Less than 10% of finance department activities are dedicated to analysis and action.

The P2P process, a complicated system of purchasing and paying for the goods/services required to deliver a solution to customers, faces multiple challenges. These range from fragmented, siloed processes to manual inefficiencies and human errors to limited transaction visibility. The results are higher procurement and invoice processing costs as well as suboptimal user experiences for buyers and suppliers.

A recent benchmark survey by the IBM Institute for Business Value reveals how exponential technologies can help P2P and procurement teams overcome these obstacles and other bottlenecks. The advantages of automating processes and data collection, gaining intelligence, and eliminating error-prone manual tasks can indeed free finance teams to focus on higher value decision-making and strategic goals.

But adoption of these technologies is lagging. For example, only 33% of 500 purchase-to-pay managers surveyed report they are implementing, operating, or optimizing a procurement platform solution—an integrated system that fully or partially automates significant parts of procurement processes.

Those organizations that have optimized such a platform are seeing significant cost and quality improvements from P2P automation compared to those that have not implemented automation software. They have reduced the total process cost to order material and services per purchase order, and they can procure 22% more of their total purchase value from certified vendors.

Organizations that have optimized a procurement automation platform can procure 22% more of their total purchase value from certified vendors.

Automation solutions for accounts payable (AP)—while also not broadly adopted—are delivering similar advantages compared to time-consuming manual processes such as invoice matching. Case in point: organizations that have optimized an accounts payable platform report 33% fewer erroneous or duplicate payments.

Accounts payable automation platforms yield efficiencies

Advanced analytics reveal opportunities

Respondents report that advanced analytics and predictive algorithms are helping them reduce costs and risks. For instance, by connecting data from suppliers and stakeholders, analytics can identify opportunities where contractual discounts have not been taken and where they could be introduced to suppliers that do not currently have them. Or they can point to potential fraud and abuse activities. In making relevant procurement data accessible in real time throughout the enterprise, analytics tools help strengthen decision-making too.

52% of top-performing organizations based on key P2P measures use advanced analytics and algorithms.

Artificial intelligence simplifies workflows

Survey results also indicate that initiatives in artificial intelligence (AI) are helping streamline workflows for greater efficiencies in procurement and accounts payable. An AI-powered workflow can optimize touchless processing and provide a unified interface for buyers, suppliers, procurement, and finance teams. The resulting spend and pricing intelligence enables better insights during sourcing.

Organizations that have optimized AI in P2P processes detect 50% more fraudulent invoices.

Getting started

Exponential technologies can be powerful performance boosters for finance. But organizations cannot jump into these investments without first building a foundation focused on the required people skills, processes, infrastructure, and culture. From there, technology adoption can accelerate P2P processes.

Download the report to see the impact of advanced technologies on purchase-to-pay. An action guide follows to help you lay the groundwork for adopting P2P solutions powered by automation, analytics, and AI.