What is a Procure To Pay System?
A Procure to Pay system handles the order/requisitioning of goods and services, procurement/purchasing of said goods and services, the receipt of, payment for, and eventual accounting reconciliation of the financial transactions involved through that lifecycle. Additionally, Procure to Pay systems can often play a central component in Vendor Management, helping to manage and support such things as: Vendor onboarding, contracts, timely payment, and communication to maintain successful relationships. All these components can be condensed into the four main systematic categories discussed below.
Procurement handles the purchasing side of a business. It kicks off when either your internal team or a customer, issues an order or requisition for goods or services. This can come in the form of a formal request to a specific vendor with a price point in mind, or a request for more information where additional information on pricing is needed before a decision can be made. From there, you lock in pricing with a formal purchase order and agreement with the vendor in question.
The Procurement module of your Procure to Pay system should include the following features:
- Successful receipt, tracking, and logging updates to Orders/ Requisitions.
- Ability to request quotes from Vendors, with the functionality to receive and compare competitive pricing.
- Be able to create and issue Purchase Orders that can be submitted to your chosen vendor with all appropriate documentation.
- Active review and tracking of in-flight Purchase Orders to watch out for things like expiration dates, potential funding issues, revisions, and closures.
- Open communication with your vendor throughout the process.
2. Receiving/Managing Delivery
Once an order has been made, next comes managing expectations and delivery of those goods and services. Your Procure to Pay system should handle:
- Managing expectations and the communication between your Vendor (the deliverer of these goods and services) and your end customer.
- Track delays and any potential holds so your customer is informed.
- Facilitate release of invoicing upon delivery of goods and services.
Once Goods and Services have been delivered by your Vendor they must get paid for said goods and services. The accounting and payment feature of your Procure to Pay system revolves around receiving, reviewing, and processing your vendor invoices to ensure that they are being paid correctly and timely. Commonly, the central features that you might expect are:
- Invoice receipt and entry of vendor invoices.
- Quality Assurance/Audit of received invoices to make sure you are paying the right vendor the right amounts for the right services.
- Quality Assurance/Audit that the PO has enough funding to pay for those services, and extra charges have been dealt with correctly.
- Approval and processing of Invoices for payment.
- Reconciliation of transactions in your primary accounting system.
4. Vendor Management
Up to this point, a Procure Procure to Pay system has dealt with handling the order, funding, and eventual payment for goods and services from Vendors. A successful Procure to Pay system also considers what communications and information will be shared and managed for the vendors it manages.
A quality Vendor Management system includes:
- Maintaining an active list of Vendors you are authorized to work with.
- Ability to score/rank Vendors for priority and preference for certain types of work.
- Maintaining contact information to better communicate with key Vendor Stakeholders when key milestones for Purchase Orders are hit, or when Invoices are received and processed.
- Keeping up to date on Vendor documentation and compliance requirements, such as insurance or NDA signatures.
In Quick Base, you have your official back end database and point of user entry. As Quick Base is easy to mold and build from scratch, a phased development approach would likely start with your primary Procurement and Accounting functions. These core pieces in Quick Base would represent distinct modules for housing and storing things like your POs, storing all associated documentation and forms, all relevant PO financial information, vendor and classification info, etc. You can take it a step further and institute controls such as approval workflows, limiting based on a person, vendor, type of work, etc. for certain dollar values. From there, Quick Base reporting can easily track daily activity, provide insight into your forecasted spend, summary spend by person, QTR, PO/Service type, etc.
With Workato, you gain the ability to remove all the manual elements that come along with all the back and forth that comes with a complicated system like Procure to Pay. Staying with the PO side of things, Workato can do such things as:
- Issuing Documents automatically to your Vendors.
- Logging and sending emails to Vendors to give visibility into what was sent, when and to whom.
- Hourly tracking of spend and billing percentages to close and re-open POs and notifying your internal and external stakeholders at each moment.
- Extract and merge data between multiple sources to combine your Procurement data with other systems.
While your particular business may not require each item bulleted above, an effective Procure to Pay system contains some elements of these four foundational pieces. With Workato and Quick Base combined, you can quickly and easily set up some or all of the above with ease.
For tips-and-tricks and how-to articles about Quick Base and Workato development, check out our Knowledge Base. Here you can find articles ranging from Quick Base and Workato’s most basic features to more Outside of the Box ideas.
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