Procure-to-pay process: A 2025 guide

No matter your organization’s industry or size, a well-structured procure-to-pay (P2P) process is crucial for acquiring the goods or services that keep your internal operations running smoothly. But it’s also a system with several complicated steps. Without proper visibility, you may face an increased risk of overpayments, operational errors, and costly inefficiencies. 

The good news? Modern technologies and innovative solutions are revolutionizing the way many organizations manage their P2P cycles. With the right tools and strategies, procurement teams can increase efficiency, gain real-time insights, and strengthen cash flow management. This guide explores the P2P process in depth, examines common pain points, and highlights how advanced solutions can transform procurement into a streamlined, strategic function.

What is the procure-to-pay process?

The P2P process, also known as purchase-to-pay, is the end-to-end workflow your organization uses to source, purchase, and pay for goods or services. This system unifies the purchasing and payment process into a seamless workflow designed to enhance efficiency, reduce errors, and deliver data-backed insights.

Key objectives of P2P:

• Reduce costs and save money: With more insight and control over your procurement, you can uncover cost-saving opportunities within your existing procurement activities and reinforce budget management.

• Make smarter business buying decisions: Data that you collect from each order helps you make strategic decisions for long-term growth.

• Drive operational accuracy: With P2P, you can generate helpful data, drive revenue, and build processes and procurement policies that align with your needs. 

• Strengthen vendor relationships: More control of your operations makes you a more reliable partner for suppliers, which boosts vendor relationships. 

   

You may also hear terms like source-to-pay (S2P) and order-to-cash (O2C) when discussing procurement process flow. P2P is a subset of the S2P process, which encompasses all activities in procurement, not just the acquisition of goods or services. O2C, on the other hand, involves the same workflow as P2P but from a supplier’s point of view. 

Why procure-to-pay is so important 

A modern P2P process offers more than just operational efficiency; it serves as an essential tool for resilience and growth. Specifically, it can provide real-time visibility and control over your procurement operations with data-driven insights into where and why your teams may be encountering bottlenecks, breakdowns, and inefficiencies. 

Based on these insights, you can create precise action plans to reduce back and forth approval workflows, boost procurement efficiency, and drive cash flow. 

For organizations of all sizes and sections, this in-depth visibility and reliable data can empower procurement teams to strategically build a P2P cycle that fosters long-term organizational growth.

What the procure-to-pay workflow looks like in practice

Even with P2P in play, you should anticipate iterating on your workflow to best suit your organization. Here are six steps to help you do so:

1. Identify your needs and requirements

To start, determine your team’s good or service needs. Factors to consider include order frequency, product specifications, and delivery timelines. These details help you strategize when and how you’ll place orders. For example, if you have an ongoing need for an item, you know you’ll need to reorder it with some frequency. As a result, you might reorder from the same vendor in bulk every three months and see a discount on your invoices in return. 

All this information lives in a purchase requisition.

2. Approve requisitions

A purchase requisition is a formal written request for goods or services. Usually, the team that needs the goods or services creates the document and outlines their requirements for the order. When that’s complete, they send the document to the purchasing or procurement department. 

Depending on your organization, several stakeholders might need to approve a purchase requisition. While it is important to build layered approval systems for high-value transactions to ensure compliance, it is equally important to avoid unnecessary delays.

It’s also helpful to note the difference between a purchase requisition and a purchase request. You can only send a request to one vendor at a time, but a requisition can contain multiple orders, either from the same or different suppliers. You might consolidate requisitions if there are several for the same vendor, but this isn’t possible for requests.

3. Select suppliers

Once a purchase requisition has the appropriate approvals, procurement teams can use it to find the right supplier. If your organization has pre-approved vendors or specific buying policies, your purchasing teams can work closely with these suppliers to acquire the desired goods and services. 

These teams should consider these factors when evaluating suppliers:

• Financial and supply chain management: Prioritize vendors with a solid track record of financial stability and supply chain optimization to lower your risk when working with them.

• Existing relationships or contracts: Choose from contracted vendors to ensure compliance and take advantage of contracted deals.

• Ability to meet purchase requisition specifications: Work with a supplier that can most efficiently meet the purchase requisition requirements.

• Regulatory policy and compliance: Ensure that your suppliers adhere to industry regulations and have internal policies that inform their business decisions. 

• Responsible purchasing mandates: Stay accountable to internal purchasing goals or regulatory mandates by identifying and prioritizing certified local businesses and diverse sellers, or purchasing products with sustainability certifications.

   

Once your procurement team finds the best supplier, the next step is to issue a purchase order (PO).

4. Issue POs

A PO is a formal document that procurement teams create and send to suppliers. It contains the following order details:

• PO number

• Goods or services

• Prices

• Quantities

• Contract specifications

• Payment terms

• Delivery terms

• Special instructions

   

The PO’s movement can offer insights into every part of the process and reveal each step’s duration, as well as compliance with contract terms. You can use these insights to identify and address operational inefficiencies. Additionally, the PO acts as a point of reference when verifying that a delivered order is correct. 

Because of this, you can extract many valuable data points from a single PO by using a centralized, standardized process. 

5. Confirm delivery

When goods arrive at their final destination, you’ll review the order to verify its accuracy. When you do, be sure to compare the delivered goods to the PO to confirm that they match.

A key component of this step is data capture, since aggregate data across several orders reveals supplier performance. On-time delivery and order accuracy, for instance, are essential elements that impact your ability to maintain a healthy bottom line and efficient workflows, so it’s wise to monitor these data points on every order.

6. Match invoices for payment

Once the order passes your quality control checks, it’s time to compare the PO to the invoice that your supplier sent to your accounts payable (AP) or finance team using two-way invoice matching. (This is different from three-way invoice matching, which involves comparing the PO, invoice, and goods receipt to verify accuracy.) This is the last step of invoice processing before the AP team releases payment.

In the past, procurement teams used manual processes for invoice matching, but this was a labor- and time-consuming task that was prone to error. However, most modern automation software can eliminate these headaches. Upon receiving the invoice, solutions like Amazon Business can instantly compare it to the PO and goods receipt. If all the documents match, the solution proceeds to invoice approval and payment. But if there’s a discrepancy, it flags the invoice and alerts you to take a closer look. 

This invoicing feature is one way that P2P software supports the P2P process—but there are plenty more.

How does procure-to-pay software work?

The right P2P software can streamline every step of the process and can reduce manual tasks and allow your teams to focus on more strategic activities, such as category management, strategic sourcing, and supplier relationship management.

According to The Hackett Group’s Digital World Class Matrix™, the best P2P software comes with major benefits, including $35 to $45 million greater spend savings, 73% touchless automation for requisition-to-purchase orders, and increased spend visibility of 40% to 60%.

Additionally, digital solutions can support your team by assisting with approval workflows and using automation to alert stakeholders when they need to review a requisition. That way, rather than manually tracking down each person, you can use the solution to gather necessary approvals for you.

When it comes to operational transparency and streamlining invoice reconciliation, solutions like Amazon Business also offer Business Order Information. With this feature, you can establish the important information that buyers need to provide during check out, including project codes, locations, or job codes. All this order information saves your team time and resources when processing invoices.

Additionally, a P2P solution can handle creating POs, tracking their life cycles, and collecting real-time data from each phase of the process to create a solid baseline of metrics that guides your business decision-making. For example, as you approach a contract end date, procurement software can prompt you to kick off renewal conversations—and provides data to inform your team’s negotiation strategy to secure a new contract that better aligns with your organization’s strategic goals.

Common indicators of P2P process inefficiency—and how to optimize them

P2P workflow inefficiency can manifest differently for every organization. However, as you set out to revise or launch a comprehensive P2P process, it’s helpful to have these common inefficiency signs in mind:

• Frequent purchase order changes or delays: If you often run into last-minute order changes or setbacks, it could be a sign to analyze your operations for inefficiencies. 

• High volume of maverick spending: Frequent rogue spending could indicate process visibility or compliance issues. 

• Long requisition-to-order cycle time: If the time from purchase requisition to order delivery is too long, your process may have bottlenecks. 

• High rate of invoice disputes or exceptions: A purchasing team that regularly sees setbacks due to invoice discrepancies or errors should look for process inefficiencies.

• Limited visibility into supplier performance: Incomplete visibility into supplier performance can result in order inaccuracies, incorrect invoices, or poor vendor relationships. 

   

The good news, though, is that resolving these operations issues is well within reach when you have the right solution.

Get a procure-to-pay process solution that strengthens your cash flow

Procurement teams across all types of organizations use P2P to acquire goods or services, but the speed and accuracy of your workflows determine whether or not your organization gets the resources it needs when it needs them. For this to run smoothly, scale with your team, and to add value to your organization, automation is a must.

Solutions like Amazon Business can help relieve your team of its more routine (and time-consuming) P2P tasks. That way, instead of scrambling to stay organized and manage your network, you can instead gain visibility into your procurement workflow and gain more control over how you spend every dollar. Learn more about our automation tools and how they can help improve efficiency and accuracy:

• Amazon Business Analytics reports: Leverage easy-to-use formats to download reports that help teams quickly reconcile expenses, verify payment details, and ensure accuracy by reducing manual entry.

• My Orders: Get instant access to order history, including product details and delivery status. This centralized view enables quick cross-checking of transactions and supports accurate matching.

• 3-Way Match: Automate the verification process by cross referencing purchase orders, invoices, and delivery receipts—ensuring all data aligns to save time, reduce disputes, and enhance accuracy.

• Managing your invoices: Get centralized access to invoices, credit memos, and bulk invoice downloads. 

• Business Order Information: Get in-depth details about each transaction for a comprehensive view that boosts transparency.

• Reconciliation APIs: Customize transaction data with line-item details and integrate with expense management systems for increased reconciliation speed and accuracy.

   

Learn today how Amazon Business can support your P2P process with tools that streamline purchasing and enhance spending control.