The use of technology to manage source-to-pay as an end-to-end process beginning with vendor selection has grown significantly over the past five years. (Procure-to-pay is a related process that begins after vendor selection and P2P is a commonly used abbreviation covering both.) Organizations are looking to increase efficiency while promoting greater effectiveness by strategically taking early payment discounts, having more immediate and deeper insight into spend to achieve greater control and optimizing supplier relationships. Traditional, paper-based and manual P2P processes are too disjointed, inefficient and time-consuming, preventing many from achieving savings, such as processing invoices soon enough to make early payment discounts practical, reducing duplicative spend and negotiating and then realizing volume purchase discounts.
Finance organizations increasingly recognize the value of P2P automation as part of broader digital office of finance initiatives, especially in source-to-pay processes. We’ve recognized
Zycus is a cloud-based software company that provides a suite of source-to-pay procurement applications typically used by large enterprises in various industries, including manufacturing, healthcare, retail and financial services. Its software platform includes modules for spend analysis, sourcing, contract management, supplier management and procurement automation. Its offering aims to simplify and reduce time spent on the entire procurement process, from sourcing and onboarding vendors, ordering goods and services to invoice processing and payment reconciliation.
Its use of artificial intelligence and machine learning is designed to broaden the scope of process automation to include areas such as spend analysis, guided buying and contract compliance management. This reduces the need for human intervention, allowing staff to focus on exceptions.
Zycus's software easily integrates with commonly used financial systems while offering capabilities to connect directly with others. It also offers a suite of tools that support end-to-end processing of transactions, reducing workloads, accelerating completion and reducing errors. Key benefits from using a P2P application include a reduction in staff time spent by eliminating paper handling, automating data entry and matching motions to substantially reduce time spent correcting errors. End-to-end process automation also improves control over strategic and corporate spend, reduces costs, provides greater immediate visibility into commitments, outlays and cash flow and enhances supplier relationships by making it easier for them to do business.
Digitally transforming core business processes became essential as organizations locked down in early 2020 because of the pandemic. The need to operate remotely presented a new set of challenges best addressed by software. Especially in the areas of sourcing, purchasing and payments, software has the ability to streamline processes, shorten process cycles, reduce unnecessary costs, provide greater visibility into cash flows, increase control and improve results. Still, accounts payable automation is likely to be more valuable than most executives think: Digitizing operations helps attract and retain the best talent because professionals spend less time on mechanical, repetitive tasks.
Zycus’s source-to-pay software addresses an easily overlooked but important opportunity for digital transformation. Straight-through processing of source-to-pay should be a priority because, in most organizations, these disjointed processes continue to operate as they did in the late 1990s. Some executives might believe their department uses electronic invoicing but, in reality, a significant number of invoices are received as email attachments and must be manually entered into the system or printed out and scanned. Even organizations that think these steps are digitally connected are likely to find that there are multiple gaps requiring manual interventions that delay completion (especially if reviews and escalations are required) and introduce errors through data reentry.
Unfortunately, these less-than-perfect systems are likely to persist. Ventana Research asserts that by 2027, only one-fourth of larger organizations will consistently manage source-to-pay end-to-end, but those that do
Zycus improves finance and accounting department performance by shifting manual work to software and systems. A practical approach to the transformation process is to undertake the change in a series of initiatives rather than a single, big-step overhaul. This approach is preferred because there’s usually limited staff time available for a singular focus on transformation. Moreover, a step-by-step approach enables departments to gather success metrics and apply lessons learned to better manage the transformation project. In determining the order of transformation projects, executives should prioritize those that deliver a high payoff with limited risk. S2P is an excellent starting point because it offers a significant return for the time and money invested with limited risk.
Investing in source-to-pay software enhances the strategic value of the finance organization. It makes it possible for the department to redefine its role to serve as an enabler of better business outcomes. Digitizing P2P with dedicated software supports this role while providing better control and visibility of corporate spending without needlessly encumbering the process. I recommend that chief financial officers, especially those that have a purchasing department reporting to them, focus on digitizing S2P processes and assess whether Zycus’s offerings can support their efforts.