Purchase to Pay process
Having a robust Purchase to Pay process can provide multiple benefits for your business. We explore these benefits here.
All invoices received by your organisation are registered automatically in the system.
Invoices can be deferred at invoice entry stage rather than via a manual monthly management account process.
Better predict commitments and avoid any “pay today or we will stop” conversations.
According to the Institute of Finance & Management, a manual invoice processing can cost £5-£6 per invoice. Automation will reduce this by 80% as workflows match invoices and send them for the required approval.
As soon as invoices are received, they are visible in the system, they can be worked on, and the purchase ledger can be closed with greater confidence. Plus, accruals can be made as needed.
Spend is controlled at order stage, rather than invoice stage when it is too late to stop or question the spend (which can lead to difficult conversations).
In addition, your finance team become more pro-active as they will spend less time entering invoices and more time monitoring spend and looking at ways to save costs.
Business Central delivers all the above benefits through built in flows that enable the design to enter the process at various stages, depending on your organisation’s specific requirements and approval processes. Whilst the system allows for Purchase Quotes most organisations enter the Purchase to Pay process with a Purchase Order that requires approval.
Find out how Purchase to Pay will benefit your business.
Improving the Purchase Quote to Purchase Payment process
A Purchase Quote can normally be raised by any member of staff within the organisation. The Purchase Quote would then normally enter an approval process before it becomes a Purchase Order.
Many organisations start the process at the Purchase Order stage by allowing selected “buyers” to raise an order to a vendor. Workflows exist to ensure the appropriate approval is obtained before it can be emailed to the vendor.
Once the goods or services are received or delivered, the Purchase Receipt is received. This is an important part of the process – without it, the corresponding invoice cannot be processed by the finance teams.
The Purchase Invoice is received into Business Central. Using OCR technology and templates, the Purchase Invoice can be read by the system and automatched against the Purchase Receipt. The system provides flexible functionality, allowing the invoice to be posted straight into the system, or routed for final approval. Alternatively, the invoice can remain in finance for a finance check followed by whatever approval flow is required, including auto approvals within a tolerance.
When the Purchase Invoice becomes due, the Purchase Payment journal will automatically select invoices for payment. Manual intervention allows invoices to be removed from payment runs and held over, and disputed invoices will not appear on payment runs. The payment run can be exported to your bank and can also be run through an approval process as required. Once posted, the payments are allocated to the invoices automatically.
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