Purchase to Pay Solutions: A Best Practice Guide

From placing an order to making and taking payment, a purchase to pay solution lets you digitalize and automate the entire process. This saves time and money, reduces errors and increases overall productivity. However, what are typical stages when selecting a purchase to pay solution and what criteria do you need to consider? To help you with this challenge, SEEBURGER expert Rolf Holicki has put together a practical guide for you based on best practice.

Let’s start with some basic yet important questions:

Why is it so important to choose the right purchase to pay solution?

The increasing digital transformation of business processes has triggered a global e-invoicing initiative. Paper-based and emailed PDF invoices are becoming less and less common, while the relevance of electronic invoice formats such as EDI, XML – or a hybrid invoice format such as ZUGFeRD – is steadily increasing. There are many reasons for this. Let’s look at ten of them:

1. Greater efficiency: Electronic formats enable an automated & efficient data transfer between systems, which results in faster business processes.
2. Fewer errors: Automated electronic data transfer minimizes the potential for human error present in manual processes.
3. Rapider, often real-time processing: Electronic formats allow transactions to be processed almost instantly, making information available in near real time and letting you make decisions faster.
4. Lower costs: Automating processes and reducing manual intervention may lead to lower operating costs.
5. Accurate data: Electronic formats contribute to ensuring accurate, consistant data as they use standardized formats and structures.
6. Better supplier management: Using electronic formats facilitates communication and collaboration with suppliers, strengthening relationships and improving transparency.
7. Compliance: Electronic formats help you adhere to legal requirements and industry standards, especially in the area of electronic invoicing.
8. Greater flexibility and scalability: Electronic formats give you the flexibility to integrate with different systems. They can be easily adapted to changing business requirements.
9. Environmental stewardship: As they reduce paper consumption and manual processes, electronic formats contribute to environmental stewardship.
10. Better opportunities for analytics: Electronic formats make it easier to analyze transaction data, which leads to greater insights and more informed business decisions.

As you can see, there are many good reasons to invest in a digitalized purchase to pay process with standardized electronic formats, which is precisely why there are so many solutions on the market. This naturally makes it a little challenging for those responsible for selecting the right solution for their organization. However, complex requirements are best approached and mastered step by step.

Best practice approaches to selecting a purchase to pay solution

Typically, selecting a good solution for your company’s needs is divided into four phases. Let’s take a look at best practices in each of these stages, from the initial needs analysis, to researching potential providers to evaluating your findings and implementing a solution.

The four phases of choosing a purchase to pay solution for your company

1. The best place to start when selecting a purchase to pay solution is with a comprehensive needs analysis. This involves thoroughly examining existing business processes, identifying weaknesses and highlighting potential for improvement. An active involvement of key players and stakeholders is crucial in order to gain a comprehensive understanding of their needs and expectations. This phase includes analyzing procurement processes, identifying bottlenecks, assessing compliance requirements and clarifying integration into other company systems. Another important aspect is to consider future developments to ensure that your chosen solution not only meets current requirements, but will be scalable and flexible in the long term.
2. The research stage involves exploring the variety of purchase to pay solutions available on the market and gathering in-depth information about potential providers. By drawing on comprehensive market research and analyzing industry reports, product reviews and customer experiences, you can acquire a solid knowledge base. This phase provides insights into the reputation of the providers and the practicality of their solutions. Assessing the financial stability of the providers is crucial to ensure long-term support and continued development of the solution.
3. The third stage involves defining clear and precise selection criteria for your new purchase to pay solution by drawing on the findings from the needs analysis and research stages. It is crucial that these criteria not only reflect the immediate needs of the company, but are also in line with its strategic goals and long-term plans. You can find out which criteria are most important here in the next paragraph.
4. In the final evaluation and decision-making phase, you apply your selection criteria to potential solutions to make an informed decision. This involves objectively analyzing the solutions on offer and carefully weighing up the pros and cons. The evaluation should also look at how well the solution fits the company’s specific business goals and long-term plans.

What criteria should you be keeping in focus?

Main criteria to consider when selecting a purchase to pay solution

1. Processing range:

A key requirement for a purchase to pay solution is its processing range. It should be able to process a variety of formats such as EDI, XML and hybrid formats such as ZUGFeRD. This capability not only ensures compatibility with current norms, but also the ability to adapt to future market standards and requirements.

2. Data source support:

In the modern business world, companies need to be able to process data from a variety of sources, be it via EDI, email, paper or other channels. The ideal purchase to pay solution should support a range of input channels to ensure a seamless and efficient data flow.

3. Global taxation reach:

Companies with international operations or plans for global expansion need to consider tax requirements in different countries. The purchase to pay solution should have enough of a reach to ensure compliance with the different tax regulations in these countries and therefore prevent potential legal challenges.

4. Workflow complexity:

Every business has unique workflows and processes. Therefore, it is crucial that your purchase to pay solution takes these nuances into account. This includes functions such as clarifying quantity and order discrepancies, approving invoices without a purchase order reference, the procurement process and creating vendor master data.

5. Mobile approval processes:

Given the increasing mobility in the world of work, it is essential that the purchase to pay solution supports mobile approval processes. This enables managers and employees to efficiently manage processes and approvals on the move, significantly increasing response time and overall efficiency.

Criteria chart for choosing your purchase to pay solution

Take advantage of this criteria chart when evaluating different purchase to pay solutions:

Figure 1: Criteria for selecting an appropriate purchase to pay solution

So far, we have focused more on internal company criteria for selecting a purchase topay solution. Let’s take a look at what role the solution provider plays in the selection process. After all, once you make your decision, you are ideally entering into a long-term partnership.

How the right provider will enhance your purchase to pay

A good provider not only understands the technological aspects of purchase to pay solutions, but also the specific challenges and needs of different industries and company sizes. The added value of such a provider lies not only in the technology it provides, but also in its commitment to helping its customers succeed.

This is why it is important to look at references and case studies when selecting a provider. A proven provider will be able to demonstrate success stories where they have helped companies optimize their processes and increase their operational efficiency.

In addition, a good provider should always be prepared to offer regular training courses to ensure that your employees can utilize the purchase to pay solution to its full potential. Through ongoing training and support, companies can ensure that they keep pace with the development of the technology and are always up to date.

Ultimately, choosing a provider is about finding a partner who will support and guide you on your digital transformation journey. A true partner will not only be present during the sales process, but will be committed to ensuring that your purchase to pay solution always meets the changing needs of your business long term.

Choosing a purchase to pay solution is just the beginning

Selecting a purchase to pay solution, and the provider behind it, is the “beginning of a wonderful friendship”. To ensure that this works in the long term, you need to pay attention to the following three issues:

·       Ability to adapt to future needs
The optimal purchase to pay solution should not only meet your current needs, but also offer the potential for future growth and customization. It’s important to choose a provider that continually invests in research and development and whose solution is regularly updated and further improved.

·       Regular training offered
As the features and capabilities of your solution evolve, it is crucial that your team receives ongoing training and is kept up to date. This ensures that you always get the maximum benefit from your investment.

·       Relationship with provider
When choosing your ideal purchase to pay solution, you are also entering into a long-term partnership with the provider. And this is where the wheat is separated from the chaff. A dedicated provider will make an effort to understand your business, provide ongoing support and work with you to ensure that the solution continues to deliver value for years to come.

The journey to implementing a purchase to pay solution is both challenging and rewarding. With the right planning, a structured selection process and an eye to the future, you can find a solution that not only meets your company’s current needs, but also those of the future.

How can SEEBURGER Purchase-to-Pay help?

The SEEBURGER Purchase-to-Pay solution provides process transparency as well as complete logging and traceability in the invoice process thanks to automated processing of incoming invoices in SAP. It includes clarification and approval workflows which log all processing and approval steps, monitoring, invoice flow analysis and archiving interfaces. It supports all e-invoicing formats and sources including EDI, XML, ZUGFeRD, PDF, paper-based and faxed invoices.

If you want to improve your supplier relationships and communication through prompt invoice processing, efficient approval and clarification workflows, and increase cash flow through timely payments and maximum utilization of cash discounts, please contact me.