Hannah Webdesign
Image default
Business / Business Services

What is the difference between procure to pay and source to pay? 

Procure to pay and source to pay are two important processes in the field of procurement, and they both play a critical role in ensuring that a company is able to obtain the goods and services it needs in an efficient and cost-effective manner. While these two processes are often used interchangeably, they are actually quite different from each other.

What is procure to pay?

Procure to pay, also known as P2P, is a process that involves the acquisition of goods and services from external suppliers. It typically begins with the identification of a need for a specific product or service, followed by the selection of a supplier, negotiation of terms and conditions, issuance of a purchase order, and finally, payment for the goods or services received.

What is source to pay?

Source to pay, on the other hand, is a broader process that encompasses the entire lifecycle of procurement, from identifying a need for goods or services, to selecting a supplier, to negotiating and entering into a contract, to managing the performance of the supplier, and finally, to making payment for the goods or services received.

The key difference

One of the key differences between procure to pay and source to pay is the level of involvement in the procurement process. While procure to pay focuses mainly on the transaction itself, source to pay takes a more holistic approach, encompassing all aspects of the procurement process. This means that source to pay includes not only the actual purchase of goods or services, but also activities such as supplier selection and performance management.

Another key difference between the two processes is the level of automation. Procure to pay is often a manual process, involving a lot of paperwork and manual data entry, whereas source to pay can be highly automated, using specialized software and technology to streamline the procurement process and reduce the amount of manual effort required.

In conclusion, while procure to pay and source to pay may seem similar, they are actually quite different from each other. Procure to pay focuses mainly on the transaction itself, whereas source to pay takes a broader, more holistic approach, encompassing all aspects of the procurement process. Additionally, procure to pay is often a manual process, whereas source to pay can be highly automated.