Purchase-to-Pay (P2P)

The abbreviation P2P stands for the purchase-to-pay process in a corporation, referring to procurement. Procurement can cover both goods and services. The P2P process includes, among other things, the request for a purchase order, the triggering of a purchase order, its receipt, and the final payment for the ordered services or the delivery of the purchased goods.

Why should the P2P process be analyzed?

The process usually takes place across different departments, from the purchasing department to the receiving department. Because of these intersections, it’s a process that’s prone to bottlenecks and inefficiencies. Multiple dependencies lead to high process complexity and a large number of process variants.

When evaluating the P2P process, consider how often discount periods are exceeded. Exceeded discount periods lead to unused rebates and unused savings potential. Additionally, when orders bypass the purchasing department, known as “maverick buying,” it can lead to missed discount deadlines and non-compliance. P2P process analysis can identify and eliminate these process bottlenecks, accelerating workflows to meet these deadlines.

Related Terms: Bottleneck, Order-to-Cash (O2C)