Procure-to-Pay: Two-speed automation

April 21th, 2020
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Companies still have a long way to go in digitalising procurement processes, especially in terms of the Procure-to-Pay process. On average, only 30% of transactions (from the purchase request to invoicing) are digitalised within companies [1]. In one of its latest studies, The Hackett Group describes the extent to which the Procure-to-Pay process is currently automated, comparing the majority of companies with those that perform best.

Procure-to-Pay: Varying levels of automation

Even if a company has implemented digital solutions, their transactions may not be sufficiently digitalised. The best-performing companies demonstrate how to optimally automate the procurement process, in particular at the start of the transaction chain, but most organisations are struggling to keep up.

It seems that the "long tail", i.e. Tail spend, is mostly slowing down the automation of the Procure-to-Pay process. In fact, only 10% of companies use an electronic catalogue for indirect purchases, compared to 14% of the best-performing companies. To further automate procurement processes, it is imperative to use the digital channels that are most appropriate for the type of expenditure. For example, vending machines are particularly well suited to MRO (Maintenance, Repair and Operations) products.

Invoicing: The weak link in the Procure-to-Pay process

In most companies, invoicing currently remains the least automated process. The best-performing companies are digitalising nearly 85% of their invoices, compared to 30% for most companies.

However, digitalising the invoicing process offers significant potential savings, as well as many other benefits, such as greater productivity and job satisfaction, paperless operation and fewer errors. In fact, a paper invoice costs the best-performing companies an average of €5.90, whereas a digitalised invoice is valued at around €1.971 (almost a third of the price!). Here too, the key to success is to adapt your processes to your stakeholders based on their digital maturity, while (still) prioritising an electronic approach.

Finally, to optimise the automation of your Procure-to-Pay process, you should adopt the digital channels that are most appropriate for the types of purchases and stakeholders involved. Combined with supplier rationalisation, optimal digitalisation provides a clear overview of expenditure and greater efficiency within procurement teams.


[1] The Hackett Group

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