Digitizing Procure-to-Pay

The procure-to-pay (P2P) process is a critical part of B2B trade, allowing corporate buyers and sellers to efficiently manage the procurement and payment of goods and services. However, this process has traditionally relied on manual, paper-based processes that are time-consuming and prone to errors. Recently, there has been a growing trend towards digitizing the P2P process in the UAE, as businesses seek to improve efficiency and reduce costs. This article discusses the benefits of digitizing the traditional P2P process and how it can help UAE businesses, as well as steps to take as part of that journey.

An end-to-end P2P process involves several steps, including requisition, purchase order (PO) generation, receipt of goods or services, invoice processing, payment and reconciliation. Each of these steps can be time-consuming and prone to errors, particularly if they’re managed using manual, paper-based processes. Manual processing of invoices is costly and can lead to delays in payment, errors in data entry and disputes between buyers and sellers.

Digitization of the P2P process helps businesses overcome these challenges and realize a range of benefits, including:

Increased Efficiency

A digital P2P process helps a business streamline its operations and increase efficiency. According to a report by the Dubai Chamber of Commerce and Industry, digitizing procurement processes can reduce processing times by up to 60%. This enables businesses to process orders more quickly, reduce lead times and improve customer satisfaction.

Improved Accuracy

Manual processes are prone to errors, particularly when it comes to data entry and processing. Automating the P2P process helps businesses reduce the risk of errors and improves accuracy. According to a report by Ernst & Young, digitizing procurement processes can reduce error rates by up to 80%.

Enhanced Visibility

Digitizing P2P is helping UAE businesses gain greater visibility into their procurement, spends and payment processes. This helps them identify areas of inefficiency, monitor spending, optimize cash management and make more informed business decisions. According to Ardent Partners, businesses that digitize their procurement process achieve an average of 20% improvement in spend visibility.

Reduced Costs

Manual, paper-based processes are costly and time-consuming, particularly if they involve manual data entry and processing. In certain cases, where a high volume of invoices need to be processed, a manual process can have a significant negative impact on supplier relationships, pricing and working capital. A digital P2P process can help a business reduce costs by automating key processes and reducing the need for manual intervention. In addition, automated payment solutions like Swipe2B enable companies to completely eliminate the cost of processing supplier payments (whether bank transfer fees or cheque printing) and strengthen supplier relationships through early payments. A report by McKinsey & Company found that by digitizing supplier payments, companies can reduce their end-to-end processing costs by up to 50%.

New Revenue Creation

Automating the payment process using Swipe2B not only enables companies to pay suppliers early using a credit card (even when suppliers don’t accept cards), but allows companies to capture new additional revenue through cash-back rebates and other rewards that credit cards offer. For the first time, procurement and AP departments are being seen as revenue generating profit centers, rather than just cost centers.

Improved Supplier Relationships

A digital P2P process helps businesses build stronger relationships with their suppliers. Providing suppliers with real-time information about order status, streamlined invoice processing and faster payments builds trust and improves buyer-seller relationships significantly. In their report, Levvel Research found that businesses that digitize their procurement processes improve supplier relationships by up to 60%.

Better Compliance

Digitization of the P2P process helps UAE businesses improve compliance with regulations and internal policies. By automating key processes and reducing the risk of errors and fraud, businesses can reduce the risk of compliance violations and improve their overall compliance posture. Deloitte found that a digitized procurement process can reduce the risk of compliance violations by up to 50%.

While the benefits of an automated P2P process are clear, how can UAE businesses practically go about achieving them? Here are several key steps a business can take:

Use An e-procurement System

An e-procurement system is a software application that automates the P2P process, from requisition to payment. E-procurement systems help businesses streamline their procurement processes, reduce errors and improve visibility. It must be noted that while there are several such systems available, very few of them, such as Swipe2B are able to automate all the steps of a traditional P2P process.

Adopt Electronic Invoicing

Electronic invoicing, or e-invoicing, is the process of sending and receiving invoices electronically. A true e-invoicing system is one that enables suppliers to easily upload invoices that are automatically ‘read’, digitized and matched against POs and requisitions within seconds. This helps businesses reduce processing times, improve accuracy and reduce costs associated with matching and reconciling invoices with POs. According to a report by the Dubai Chamber of Commerce and Industry, companies that adopt e-invoicing can reduce invoice processing times by up to 70%. No two supplier invoices are the same. When selecting an e-invoicing system, it’s important to ensure the versatility of its user interface (how easy and in how many ways a supplier can submit an invoice) and the technology it uses to ‘read’ the invoice – eg OCR or AI that enable it to accurately read a large variety of invoice formats.

Use Digital Payments

Digital payments, such as credit cards and electronic fund transfers, help businesses streamline their payment processes, reduce costs, improve security and reduce their carbon footprint. Using solutions like Swipe2B enables companies to also capture cash-back incentives on all its payments, representing a potentially significant new revenue stream; and automate reconciliation saving additional time and costs. According to PwC, electronic payment transactions in the MENA region are expected to reach USD 690 billion by 2025.

Embrace Automation

Automation is no longer an opportunity – it’s an inevitability. More and more UAE businesses are reducing manual intervention and improving efficiency of their P2P processes. On the other hand, sellers who are in need working capital and better cash flow are looking for efficient and automated solutions that offer early or on-time payments from B2B clients. Automated PO processing is helping reduce processing times, improving accuracy and reducing costs all round. It’s important for automation to not be seen as a job killer, but rather a tool that allows key personnel to focus on more important and strategic tasks, instead of the repetitive, time-consuming and mundane ones.

Invest In Analytics

Investing in analytics helps businesses gain greater visibility and insight into their procurement and payment processes. By analyzing their data on spending, supplier performance and other key metrics, companies are able to identify areas of inefficiency and make more informed business decisions.

Digitizing the traditional P2P process is helping more and more UAE businesses improve efficiency, reduce costs and build stronger relationships with their suppliers. By adopting e-procurement systems, e-invoicing, digital payments, automation and analytics, these businesses are able to streamline their procurement and payment processes, reduce errors and improve visibility. As the use of digital technologies continues to grow in the region, more and more businesses are leveraging these technologies to stay competitive in today’s marketplace.

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