P2P procurement guide: A roadmap to smart business buying

P2P procurement, short for “procure-to-pay” procurement, can help your business streamline the procurement process to achieve greater cost control, increased operational efficiency, and improved compliance. When you pair the process with dedicated procure-to-pay software, its benefits only expand. 

Features like automation and real-time visibility into your highest-priority KPIs can give you the tools and data you need to support strategic decision-making and improve cash flow. 

However, to truly reap these benefits, you must first understand what’s involved in the procure-to-pay process, its advantages and implementation, and where procurement software is headed.

What is the procure-to-pay (P2P) process?

P2P procurement is a structured system organizations use to support the acquisition of goods and services. It involves integrating purchasing workflows into procurement and accounts payable systems to make the purchasing process as efficient as possible.

As part of the larger procurement process, the procure-to-pay cycle happens downstream of the source-to-pay cycle. It deals with the transactional aspects of procurement, which is why it’s sometimes referred to as “purchase-to-pay” procurement. In contrast, source-to-pay encompasses all procurement activities, starting with strategic sourcing and continuing through payment and beyond.

The P2P process

Because the P2P cycle focuses on purchasing activities, its components are all related to transactions. Key steps in the P2P lifecycle include the following:

1. Identify your needs: The P2P cycle begins when you identify a need for a product or service and outline the purchase requirements.

2. Create a purchase requisition: Next, you create a formal purchase request that kicks off the internal approval process.

3. Issue a purchase order: Once approved, generate a purchase order (PO) detailing the purchase terms, including exact items, quantities, and delivery parameters.

4. Receive requested goods or services: After the goods arrive or services are complete, you create a goods receipt to confirm the purchase is as expected.

5. Process the supplier’s invoice: Once the supplier submits an invoice, you check its accuracy against the original PO and order receipt. 

6. Send payment: To complete the purchasing process for an individual order, you now execute payment using the agreed-upon payment method.

Monitor supplier performance: To ensure efficiency in the larger P2P process, continue building partnerships with suppliers that consistently deliver quality goods and services.

Why is P2P important for enterprises?

According to the Chartered Institute of Procurement & Supply, 69 percent of procurement leaders surveyed reported spending more than $50 million on goods and services per year. Addressing even the smallest inefficiencies can make a million-dollar difference at this level of spending.

The right procure-to-pay solution can lead to significant cost savings through streamlined operations and improved supply chain management. It can also increase access to discount pricing on goods and services and better contract terms through improved supplier relationship management.

4 benefits of the P2P process for large enterprises

Implementing a P2P software solution delivers a host of benefits that can positively impact an enterprise's bottom line. Here are four of its top advantages.

1. Spend visibility and cost reduction
   P2P software can provide real-time visibility into your organization’s spending activities, allowing you to track buying patterns and optimize savings. Tools like Amazon Business’s Spend Visibility feature (included with Business Prime) use data visualizations to help you make smart budgeting decisions and find cost-saving opportunities.
   
   
2. Compliance and risk management
   Using a P2P solution can enhance internal and external compliance by standardizing purchasing processes, creating clear audit trails, and enforcing organizational policies. Organizations can configure P2P software with specific rules, such as setting budget limits and guiding employees to approved suppliers.
   
   
3. Supplier consolidation and contract management
   P2P software centralizes procurement activities, helping you build stronger relationships with a more consolidated set of suppliers. These tools often store vendor contracts to keep all documentation in one place.
   
   
4. Process automation and efficiency
   Automation helps streamline time-consuming manual processes, such as invoice processing and the creation of purchase requisitions, to reduce overhead spend. It can also speed approvals and take care of simple supplier communication.

According to Statista, only 56 percent of more than 3,400 global procurement decision-makers reported automating manual processes in 2024, leaving plenty of room for realizing cost savings.

Common challenges in the P2P process (and how to overcome them)

It’s one thing to get behind the idea of P2P management, but it’s another to make it a reality. There are a few common challenges enterprise procurement teams face when implementing a new P2P process.

Gaining organizational buy-in

While procurement leaders are steadily gaining more attention at the executive table, some still view procurement initiatives as a low priority. This perception can make it difficult to get the organizational buy-in necessary to support digital transformation.

To tackle this challenge, create a strong business case by outlining the realistic bottom-line impact the software could have on spending. Showcase capabilities through demos and case studies, address implementation and training concerns, and align the investment with clear business objectives.

Ensuring supplier compliance

Supplier noncompliance can put your organization’s finances and reputation at risk. To take greater control of your supply chain, always:

• Verify supplier information, such as their financial stability

• Define clear supplier selection criteria and use thorough due diligence during the sourcing process

• Evaluate the supplier’s performance history and compliance records

• Continually monitor and audit vendors to mitigate risk

   

Requiring a mix of centralized and decentralized procurement

Some organizations spread purchasing power across individual branches, departments, or specialized teams rather than relying on a central procurement department. Others employ a hybrid model that uses both centralized and decentralized purchasing at the same time.

P2P software supports this flexibility by centralizing the purchasing experience and standardizing approval processes, even if different team members need to make purchases. 

For example, you can use a solution like Amazon Business to fulfill all purchasing needs by granting access across teams. This approach lets you set preferred suppliers and standardize workflows while giving individual departments the autonomy to make their own purchases.

How to implement the P2P process: A step-by-step guide

Once you work through any challenges, you can begin the implementation process. Here are five steps to help guide the way.

Step 1: Assess your current procurement process

Take a look at your current procurement process to determine what’s working well and what could be improved. Ask yourself and your team about possible areas for automation, current compliance risks, and pain points with existing business processes or technology.

Understanding where you are can help you identify where you need to go, which can inform your decision-making on the type of P2P solution to implement.

Step 2: Gather stakeholder buy-in

Organizational change requires buy-in, especially from those it will impact directly. Find a few internal stakeholders to help champion the idea of P2P software and the efficiency it can bring to current workflows. Clearly define its benefits and open a two-way dialogue with stakeholders using the process. 

Step 3: Choose a P2P procurement tool

To choose the best procure-to-pay software for your organization, it's important to focus not only on existing process flows but on future needs as well. Consider a solution that can scale alongside your business. 

Step 4: Train procurement teams

Before you implement new software, make sure to train employees so they are prepared to use it on the first day. Ensure team members have the resources they need to succeed, including information on what to do if they need assistance. You can also consider introducing a pilot program before going live.

Step 5: Assess performance and scale across your organization

Once your software is live and working as intended, scale the process across the rest of your organization until the transformation is complete. Continue to monitor KPIs and make adjustments to optimize cost savings and performance.

Must-have features for P2P software

There are many P2P software solutions on the market, so choosing the right one depends on the capabilities you need. When shopping around, consider these major features in your decision:

• Purchasing controls: Enforce internal spending policies with digital tools like budget limits, approval workflows, guided buying, and preferred supplier labeling.

• Data analytics: Get actionable insights to help drive strategic purchasing decisions and measure progress toward goals.

• Integrations: Make sure the P2P system you select integrates with your existing e-procurement solution or enterprise resource planning (ERP) system.

• Automation: Choose a tool that automates manual tasks like invoicing and spend tracking for improved financial oversight.

• Selection: Opt for a solution that provides access to items relevant to your business from diverse suppliers. 

   

The future of the P2P process

Technologies like artificial intelligence (AI), blockchain, and other innovations are shaping the future of P2P. Here are a few trends to keep an eye on as you move forward.

The role of AI and automation

AI is helping procurement teams assess supplier credentials, forecast potential supply chain disruptions, and prevent fraud by flagging unusual activity. Companies also use it for automated predictive procurement so they can make data-driven decisions regarding customer demand and potential material shortages to mitigate risk.

Integrations with ERP and e-procurement solutions

P2P software solutions are becoming easier to integrate into existing e-procurement or ERP systems, meaning organizations can adopt P2P processes without switching up their entire tech stack. 

With Amazon Business, integrations include Punch-In, Punchout, Integrated Search, Hosted Catalog, and more.

Enhanced security with blockchain

Organizations are using blockchain to increase transaction security by providing a tamper-proof and transparent ledger for purchasing activity. Once stored, users cannot alter the data, making it a powerful tool for enterprises looking for added protection.

Streamline your purchasing with smart P2P procurement

P2P solutions have the power to completely change the process efficiency of your organization’s supply chain. It can help you save money, reduce risk, stay compliant, and buy smarter.

As a procure-to-pay solution, Amazon Business streamlines purchasing, payments, and spend visibility while integrating with your existing P2P workflows. It’s best suited for organizations looking to enhance procurement performance without overhauling their entire system.

Modernize your procurement process with automated purchasing, bulk discounts, and spend management controls. Sign up for a free Amazon Business account today, or contact our sales team to discover how Amazon Business can optimize your enterprise P2P strategy.