For many companies, the source-to-pay process is the backbone of the businessIf it is done incorrectly, there could be money loss, wasted resources, and other serious issuesAlthough it can be a very complicated process at times, it doesn’t have to beIf you or your procurement team knows exactly how the source-to-pay process works, everything should run smoothly, every time.
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Source-to-Pay Steps
Every business is different, so each process will be unique to the needs of the establishmentFor example, a company that has to source for cleaning products will be completely different from one that sources technical servicesHowever, although there are extreme differences between the goods, the basic workings of the processes that happen in order to obtain these sources are basically the same:
- Planning
- Sourcing
- Buying
- Paying
Yes, the procurement process can be a bit daunting, but when you stick to the basics it doesn’t have to be complicatedThere are four basic steps in the process of S2P that make up the whole process.
The Planning Step
The first and probably the most important step in the source-to-pay process is the planning phaseIt is always a good idea to have a look at the entire scope of the process before setting it into actionIn this phase, the company will take a look at the needs of the establishment and the best way to go about meeting themMapping out the entire step can expose potential issues before they have a chance to actually happenHaving a good, clear vision of the task at hand will be of great help throughout the process.
The Sourcing Step
When it comes to finding the right sources for your business, that are going to bring back the highest returns it takes a bit of finesse and researchHowever, when you utilize a digitized source-to-pay process it can make the process quite a bit easierIn either case, whether you manually seek out your sources, or use artificial intelligence to find them for you it is all about connecting with the right vendors and creating laying relationships that benefit everybody that is involved.
This step is where you communicate with your suppliers, agree on prices and other details of each projected transaction, then sign a contract that keeps both sides of the party honest and on track.
The Buying Step
The buying step is a critical part of the processThis is where you have to make sure that you are getting the items that you order at the prices that you agreed to in your sourcing contractsThis step can also be done in a digital format with the help of software that is designed to simplify the process.
Whichever way that you choose to facilitate this step, it is important to double-check the items and the pricing of them to ensure that the contracts are fulfilled.
Ordering and buying goods or services can be done through the use of catalogs, and various web applications.
The Paying Step
This is the step where everything gets paid for and all of the invoices for the source-to-pay process in the particular time period are satisfiedYou can do the process manually for each transaction, or have a digital platform do it for youA digital source-to-pay application will have the capacity to automate most of the process and take care of the invoices for you.
In Simple Terms
When it comes to the source-to-pay process it is easy to get carried awaythe details that encompass the procedureThe four simple steps that we discussed in this article make up the whole process and can be broken down into smaller steps within each stepAll in all, source-to-pay is the entire process from the first steps of procurement to the lastFrom finding the sources to fulfill the needs of the company to finally paying the vendors for their goods or services.