Comprehensive business process automation covering procedures from the issuing of a purchase order through payment of the invoice is referred to as "procure-to-payment" technology. Procure-to-payment or purchase-to-payment (P2P) technology solutions automate all or most of the significant procedures from the point that a purchase order is issued through payment of that invoice via an integrated system. Such systems typically incorporate visibility into the process and capture of business intelligence.

There are a variety of P2P approaches and they do not necessarily match each other or solve exactly the same problems. While by definition procure-to-pay solutions address the longest cycle among payables process automation technologies, they may be applicable to only a small part or to a large part of a company's total spend. P2P technologies may focus on purchase-order spend or on program (i.e. utilities, telecommunications, etc.) spend. Others are part of a commercial card system that works extremely well for that part of spend that flows through that system, which may be only 10 percent, though many card issuers are promoting wider use. Some may be capable of integrating p-card spend, program and PO spend and non-PO spend as well.

And if suppliers claim the capability of handling all manner of purchasing and payables, when pressed they may acknowledge their solution is best suited to a particular segment of payables. Companies should investigate carefully to determine actual practice with a given solution versus what its planned capabilities are. Supplier references can help here.

The approaches of various solutions differ. There are in-house systems, hosted software-as-a-service or ASP solutions, and card programs, most of which have begun building networks of suppliers that have agreed to format and send invoices according to the solution’s requirements (or accept card payments and the interchange fee).

The solution’s network of participants is key to your success. Solutions providers approach network expansion by providing various strategies and levels support. You have to have some satisfactory level of participation in the network by your suppliers. One of the questions for P2P solution providers is what is the strategy for enrolling vendors, and to what extent is the solution provider involved in the process.

The hope of paperless processing

The concept of paperless transaction processing has been around for a very long time. The reality, however, has been long in coming. Effective purchase-to-pay solutions have had to overcome significant challenges including:

• a lack of standardization of systems and formats between trading partners,
• an inherent problem of buyer vs. seller orientation, and
• the consequent complexity of the value propositions involved—what motivates one party in a transaction is different from what motivates the other party.

Solutions have developed from different two different starting points: seller-driven (e.g. Avolent) and buyer-driven. Within the buyer-driven group, solutions have come from the purchasing end (e.g. PurchasingNet or Ariba) and some from the payables end (e.g. Xign or Powertrack).

Encountering resistance to early, limited solutions, suppliers listened to the needs of the market and expanded the reach of their solutions. A given product may not be in itself comprehensive but rather designed to integrate with and complement an ERP system to transform the whole into an end-to-end system. Another product may be self-contained.

The genesis of a solution influences its development, but all have to consider buyer and seller needs. Viable systems must hit the sweet spot where the benefits for buyers and sellers overlap, while also adding value in different ways for buyer and seller.

A procure-to-pay system will typically address most of the process components of concern to payables (buyers), as follows:

• e-order (creation, or at least export and transmission of electronic PO, which can be "flipped" into an e-invoice; other electronic order, e.g. via Web catalogue)
• invoice capture (e-invoice and imaging)
• invoice validation
• workflow - invoice approval & coding, matching
• exception management & dispute resolution
• payment & remittance information
• accounting (integration with GL)
• data warehousing (e-records)

A few solutions also have cross-border capabilities, including cross-currency payment and tax compliance.

In addition, P2P solutions typically provide visibility into the process to provide real-time status for payables, internal customers and vendors. Additionally, they should offer business intelligence reporting capability.

Some systems integrate with any ERP or primary accounting system. Others were developed to work with a particular ERP system or systems (or are an ERP system, such as Oracle). Independent ASP platforms interface with all systems. Many provide a modular or component approach, which allows companies to transition progressively toward total automation.

The challenge for companies is to cut through terminology and claims to determine how a system works and what it can actually do. In this, references are invaluable. An organization that has implemented a solution and used it for six months or a year can tell you what the system can and cannot do.

It is also important to understand the business model of the solution provider so that you have a better understanding of costs and provider incentives.