Everything To Know About Source-to-pay(S2P)
E-procurement has been the backbone of many companies for quite a while now. If you’re not familiar with it, e-procurement is the process of buying and selling services or supplies digitally or over the internet.
A great process that leads to e-procurement is source-to-pay. We’ll be talking about the steps involved and if it is actually better than procure-to-pay. If you are looking for information on source-to-pay, then you are at the right place. Here is everything that you need to know about source-to-pay (S2P).
What is source-to-pay?
Source-to-pay in itself is not very different from its counterpart, procure-to-pay. Source-to-pay is an end-to-end process that adds one more step to procure-to-pay to provide better results. The step that we are talking about is strategic sourcing which helps in sourcing quality vendors and cutting a deal resulting in the payment for your goods or services.
Companies have been investing in sources to settle software for many benefits that the process is providing. Companies are seeing huge developments in sales and profits as soon as they adapt to source-to-pay solutions.
Various steps involved in source-to-pay
As mentioned, S2P isn’t very different from the procurement process. S2P is instead a digital process that leads to a better version of procurement that is e-procurement. Here are the steps that the process generally take:
Before selling something, we need to check if there is a demand for that particular service or product. If not, there is no point in selling something that is not required. On the other hand, demand can be created by lowering the prices of that service.
You need to find potential vendors from the supply chain. After being located and evaluated, vendors above a certain standard can be cataloged in a list. Companies generally use software platforms to handle this task. This software helps in handling large amounts of data based on market trends, company goals, etc.
- Creating a bid
In this step, various RFx documents are assembled. An RFx refers to a document that contains any “request for” basically anything. You create terms and proposals that will be beneficial for both you and the vendor.
- Making a decision
The candidates are then reviewed. Favorable candidates whom the company can profit from are selected while the rest are not.
The vendors who are selected from the review process are negotiated with. After negotiating the pricing and other terms, an official contract is created.
Once the contract is finalized, all that is left is signing the document from both parties as to the official agreement of term.
- The transition
This is the part where source-to-pay transitions itself from procure-to-pay. After the signing, all responsibilities regarding purchase orders, invoices, and payments are handled by the procurement team.
This all may seem like a tiring task, and it is if you are doing it all manually. However, with the developments in the IT industry, all of these tasks are achieved much more efficiently and in a quicker manner through software designed for this task.