P2P (Purchase to Pay) technology – the push for process perfection
In Europe’s challenging and competitive markets, it’s essential for businesses to investigate how they can boost cost effectiveness, process efficiency and improve stakeholder relationships. Whatever the current climate, it’s hugely beneficial to a company’s balance sheet to be efficient, responsive and lean.
Certain business functions have a tendency to be more challenging to manage. P2P, the procedure of requisitioning, purchasing, receiving, paying for and accounting for goods and services, is one such function. However, this is changing, as businesses start to focus on dealing with issues in the process through the adoption of end-to-end P2P solutions.
This deployment of P2P technology in Europe varies, with 50-60% of European businesses only achieving limited adoption of P2P technology, according to the latest research from Canon. However, between 20-40% of companies have implemented P2P technologies such as document management, P2P analytics and e-invoicing. European business decision makers are aware that P2P requires modernisation and this is going to see the process radically change over the next two years.
Get your priorities straight
The business functions comprising the P2P cycle, namely finance and procurement, have related but differing goals for the P2P process. There is a common goal for both disciplines in improving the overall procedure, with of decision makers in both finance (55%) and procurement (55%) agreeing it is their top priority.
Reducing purchasing costs is also another key consideration, with 51% saying this is an objective for procurement, while reducing accounts payable costs is a target for 38% in finance. After this point, priorities begin to differ slightly, as 39% of business leaders say a goal for procurement is better management of indirect spend. However, for finance, the reduction of risk is a priority for 35% of decision makers.
Although these focus areas may vary slightly, there seems to be a general consensus that P2P process improvement, improved cost management and lower risk can be supported by technology – for both European procurement and finance departments. Decision makers clearly believe that improving the P2P process via end-to-end solutions will forge the path to controlled spending and cash flow, lower risk levels and greater efficiencies.
To unlock this vision, many already rely on end-to-end P2P technology solutions; which foster increased visibility and improved control of P2P. P2P technology has the ability to identify where money is being spent, what it is being spent on and whom is spending it. This information around expenditure is invaluable in improving P2P cost control and risk management.
P2P technology proliferation
The move towards the complete digital transformation of P2P is already underway. Almost a quarter (23%) of European decision makers say their businesses will achieve full digital transformation for P2P in the next two years. The Italian and Spanish markets are the most optimistic about achieving this, with 40% and 33% of decision makers there, respectively, predicting this will happen in the coming two years.
The P2P technology that businesses are planning to adopt over the next two years is geared to decision makers’ business priorities around greater efficiency, improved cost and spend management and reducing risk.
The amount of documents leveraged in P2P can be confusing, so it’s unsurprising that 39% of European businesses already employ document management technology. Moreover, a further 58% plan to deploy it over the next two years. This makes document management the most popular technology adoption in P2P across Europe.
In Europe, invoicing can be one of the most lengthy and expensive functions. It is clearly a priority area for optimisation through advanced technology solutions. Over the next two years e-invoicing will be adopted by 56% of businesses, while 55% of companies will deploy invoice capture and 54% will install invoice processing.
While managing invoices is clearly important to settle payments, so too is keeping expenses in check. Over the next two years 55% of European businesses plan to deploy expense management technology to support them in mitigating expenses. The use of P2P analytics tools, which have the ability to analyse the overall P2P process and provide data for use in streamlining programmes, is also set to increase. Of the businesses surveyed, 39% currently use spend analytics and 51% are planning to install them in the coming two years. Currently 27% of businesses leverage P2P analytics and reporting tools and 49% plan to do so in the next two years.
Over the coming two years, European businesses are going to build on the P2P technology solutions they are already using. However, this journey is only just beginning. The next two years will mark a big step forward in the deployment of technology in P2P – as businesses focus on facing down the efficiency, cost and risk reduction challenges that have beleaguered their P2P operations for too long.