What is source to pay and what can it mean for your organisation
A source to pay process, you’ve probably heard of it before. But do you know exactly what it entails and what it can mean for your organisation? In this blog, we will explain exactly what this is, what it can mean for your organisation and the difference between source to pay and procure to pay.
What is source to pay?
Source to pay services help organisations set up the procurement process more efficiently. Source to pay refers to the process from sourcing to payment. This involves synergy between the procurement and finance departments. In fact, it often happens that these departments work independently of each other. The work done in the finance departments affects the procurement department and vice versa the same. It is therefore important that these departments do work together. Through source to pay, you no longer approach the departments as two separate departments, but as 1.
What are the benefits of source to pay?
Through source to pay, you ensure that the procurement and finance departments work better together, we know that by now. But there are of course other benefits of source to pay. We have listed a number of benefits. These mainly involve digitising the source to pay process.
- This digitisation means less paper and manual work
- Always visibility of the organisation’s performance and expenditure
- Communication with suppliers will improve
- Supplier performance can be prepared and then monitored
- There is more overview and strengthening of supplier relations
- Purchasing conditions can be improved
- The supplier base can be reduced by up to 80%
How to start with source to pay?
You can start with source to pay based on 4 points of focus.
- First map the current processes. Make a good inventory of everything.
- What goal do you want to achieve? And what is needed to achieve this goal?
- Take a good look at how to do this step by step.
- Improve. Stay sharp on opportunities, for example.
What is the difference between source to pay and procure to pay?
If you are already somewhat familiar with source to pay, the term procure to pay probably sounds familiar to your ears as well. But what exactly is the difference? Source to pay assumes the end-to-end process, covering all procure to pay phases. Procure to pay limits itself to a few specific phases within the entire source to pay process. Indeed, source to pay provides a 360-degree view of the organisation’s performance and expenditure. With procure to pay, this is limited to analysis on purchased goods.
Source to pay can therefore mean a lot to your organisation. Processes are designed smarter and then digitised. By taking into account the aforementioned focal points, the process will therefore run smoothly.