Your Source-to-Pay FAQ - in blog form
It may surprise no one that for as many vendors and analysts out there, there are an equally number of definitions for the term source-to-pay. Now, it would be impossible for me to harmonize these disparate explanations and in reality, it would smack of hubris (which I’m typically not afraid of) to attempt such a feat. So, with a reasonable tone, I’ll do the one thing I’m qualified to do, and help create a definition for OpusCapita.
In order to create the definition, the simplest approach was by answering a few of the questions (in the context of source-to-pay) which we have received over the past few months. If, after reading this blog, you still have more questions, then by all means reach out to me and I’ll update this blog.
1. What is Source-to-Pay
Source-to-Pay is a single process that combines the sourcing of goods & services with operational procurement and accounts payable processes. Source-to-pay is often (but not always) considered holistically by larger organizations due to the integrated control, visibility and efficiency gains which become possible when the broad process is modernized and automated.
2. What does automating my source-to-pay process really mean?
When 'automating source-to-pay' is discussed, it typically refers to the automation of those process steps which are either repetitive or simple enough that they can be automated with either business rules or artificial intelligence. The goal of automation is to reduce the amount of low-value work done by professionals in procurement and accounts payable departments. Additionally, automation reduces the potential for human error during manual or repetitive work.
3. What is the connection between procurement and accounts payable processes?
As recently as the early 2000s, procurement and accounts payable departments had very poor communication and operated independently of one another. Over the past 15 years, advances in e-commerce, invoice automation, e-procurement, and business networks have made it possible for both departments to collaborate around the same process: source-to-pay. Both procurement and accounts payable departments effectively work with the same stakeholder groups (suppliers and buyers/requisitioners) and when they work well together, the results are very synergistic.
4. Why are e-invoices so important to accounts payable automation?
E-Invoices replace paper invoices in the accounts payable process. The transition away from paper invoice processing has been the single biggest advancement to the AP function in modern times. A paper invoice needs to somehow make it into an electronic process - either through manual data entry or through a process of scanning with OCR technology. Both options are error-prone, slow and expensive. An e-invoice can go directly from the supplier straight into the AP system of the buyer organization with 100% data quality. The result of e-invoicing is that the invoice can be processed faster, often entirely automatically and these efficiency gains translate into cost savings and create opportunities for supply chain financing.
5. What is PEPPOL and why is it important for source-to-pay?
PEPPOL stands for Pan European Public Procurement OnLine. It's a specification agreed at the European level to enable cross-border eProcurement. It's an open standard that has been created in public-private collaboration and is widely adopted across Europe. PEPPOL is not mandatory across Europe but when an organization adopts the standard, they join an interoperable business network which includes the ability to send and receive procurement and invoice related documents electronically, greatly speeding up and automating much of the sourcing, ordering, shipping, invoicing and paying processes between buyers and their suppliers.
If you’ve made it this far I think the appropriate thing to do is ask you if you would like to contribute to the conversation. Feel free to write me a note email@example.com (ref: Rowan Lemley) and it will find me.
Rowan has more than 10 years of experience in the purchase-to-pay arena. During this time, he has managed the go-to-market for a diverse set of portfolios including Accounts Payable Automation, B2B Networks, Financing Services, eProcurement and Product Information Management.
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