P2P softwares are rapidly gaining importance as finance prepares itself for maximum automation. After automating several processes like core bookkeeping, accounts receivable, accounts payable, payroll, and tax compliance, the business world is preparing itself for P2P automation.
Today, P2P has more than one meaning to it, and hence it is vital to understand the p2p meaning in finance. P2P in finance stands for purchase to pay or procure to pay. As the full form suggests, it is a comprehensive term for all the processes or activities in the life cycle of goods. The cycle begins when the company initiates an order for specific goods or products and ends when the company pays the due for the ordered items. The p2p process unifies the working of the procurement team and the accounts payable team.
It involves finalizing the requirements with quantity and quality, placing a purchase requisition with the procurement team, finalizing a vendor, and placing the order. The role of the procurement team ends here, and the accounts payable team picks up when they receive the invoice for the ordered goods. Once they receive the invoice, they cross-check the details, seek approval for payment, and then schedule the same. This is the end of the p2p process.
To perform these tasks manually is grueling, labor-intensive, and costly. This is where p2p software comes into the picture. But what is p2p software? What is the p2p software definition? what is p2p mean?
A p2p software or a p2p program streamlines and manages the entire p2p process into a centralized system. The goal here is to let the machines do the monotonous tasks efficiently and error-free. JaggerOne, GEP SMART, PRM30, Zycus are some of the top p2p software available in the market.
Now that you understand what is p2p software definition, let us look at the different tools you can use for p2p automation
1. OCR and ICR
Optical character recognition (OCR) converts scanned images into text, allowing you to convert paper documents into editable, searchable digital documents. This can help reduce the physical space needed to store documents while vastly improving workflows involving those documents.
In comparison, ICR, or Intelligent Character Recognition, recognizes handwriting fonts and styles. ICR software is essential in business because it reads the handwritten text in scanned documents as part of an enterprise content management system (ECM).
Furthermore, ICR is a smarter OCR that can concentrate on details. While OCR is typically used to retrieve typed documents that can be categorized and searched, ICR handles handwriting with more complex styles than OCR.
OCR and ICR are primarily used to scan invoices, delivery receipts, and purchase orders. They simplify the process of data entry, omitting any possible errors.
E-invoicing stands for electronic invoicing and does not mean unstructured data in a pdf or word format, image invoices, unstructured HTML invoices, or scanned paper invoices sent as fax or images. It makes use of an e-invoicing channel that allows direct transmission from the supplier’s system to the buyer’s.
This reduces the paper trail, chances of losing invoices, or entering an invoice twice into the system. Since everything is available in a single place, cross-checking the details before approval is faster.
3. Robotic Process Automation (RPA)
RPA or robotic process automation performs repetitive tasks based on specific rules with minimum human intervention. It is used to automate the end-to-end procurement process without requiring significant investment by leveraging resources and automating manual tasks such as
- Planning requirements, such as data collection, inventory monitoring, and the creation of purchase orders.
- Tracking resource utilization, such as payment and delivery dates
- Creating a workflow strategy for approvals throughout the process
- Managing and evaluating information from vendors or third parties
- Automating and controlling the generation and closure of requests
4. Artificial intelligence (AI)
Artificial intelligence (AI) is simply the meticulous application of mathematical techniques and analytical methods to create the appearance of intelligence, targeted to a specific task.
It seeks to improve collaboration and coordination between the two departments involved and frees the employees from tedious tasks. The agility of the technology speeds up the procurement process and helps you get the best goods at the right prices. Moreover, since it makes everything available in real-time and is accessible to everyone, it increases visibility and reduces the dependency on others for answers and progress reports. Artificial intelligence also optimizes cash flow management and eliminates paper trail.
P2P processes you can automate the right way
P2P software that automates purchase requisitions makes it easier to list out the goods/products required, gain approvals, and send the requisition order to the procurement team for further processing.
P2P programs for automating purchase orders speed up the process of creating a purchase order and dispatching them to the vendors. It highly reduces the chances of sending the purchase order to the wrong vendor and eliminates errors. Furthermore, other departments such as finance can track the pricing and approximate delivery date at all times.
Once the invoices reach the company, the team checks for errors before sending them for approval. Once cross-checked with other relevant documents, the p2p software will automatically send it to the authority for approval to disperse the payment. Once approved, the system considers several factors like current cash management rules, disbursement rules (if any), due date, etc., and schedule the payment.
A pre-defined vendor list ensures that all the vendors are verified, their prices are defined, and the quality matches your needs. Furthermore, it saves you the trouble of searching for a vendor when you urgently require goods. Automation will help you achieve this effortlessly, study vendor behavior, and raise flags for an anomaly.
What do p2p software do?
P2P software merges all the processes in the procure-to-pay cycle and transforms them into a single system. It enables companies to optimize the process without compromising on speed.
Can a single p2p software handle everything?
Finding a single software that meets your needs without compromising anything is hard. It is hence advisable to automate different parts and then integrate them.
Is automating the p2p process necessary?
Successful businesses are the ones that stay adept and leverage technology to sustain competition. Automating the p2p process is a small yet significant change whose benefits will reflect on the working of the entire organization.
What tools can a company use to automate the p2p process?
Organizations can automate the p2p process using artificial intelligence, robotic process automation, machine learning, e-invoicing, optical character recognition, and many more. Once automated, you can integrate it with the existing ERP system for smooth flow.