Market Perspectives

The use of technology to manage procure-to-pay as an end-to-end process has grown significantly over the past five years as organizations look to increase efficiency while promoting greater effectiveness. Beyond efficiency gains, benefits include strategically maximizing early payment discounts, having more immediate and deeper insight into spend to achieve greater control and optimizing supplier relationships. The related and often interchangeable term, source-to-pay, views the process starting one step earlier with vendor selection. 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 benefit from early payment discounts, reducing duplicative spend and negotiating and realizing volume purchase discounts. Finance organizations are increasingly recognizing the value of P2P automation as part of broader digital finance initiatives, which is why we have included P2P in the 2023 Ventana Research market agenda for Office of Finance.

Basware provides cloud-based P2P software for organizations of all sizes. The software is designed to simplify and automate the entire procurement process, from ordering goods and services to invoice processing and payment reconciliation. Basware's software can easily integrate with commonly used financial systems while offering capabilities to connect directly with others. It also offers a suite of applications specifically designed for small and medium-sized businesses.

Using a P2P application eliminates paper handling to reduce staff workload and automates 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 immediate visibility into commitments, outlays and cash flow; and enhances supplier relationships by making it easier 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 set of new challenges that were 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 flow, increase control and improve results. Accounts payable automation in particular 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.

Basware’s P2P software addresses an easily overlooked but important opportunity for digital transformation. Straight-through processing of procure-to-pay should be a priority because, in most organizations, these disjointed processes continue to operate as they did in the late 1990s. Some finance executives might believe they have electronic invoicing when, in reality, a significant number of invoices are received as email attachments to be manually entered into the system or printed out and scanned. Even organizations that believe these steps are digitally connected are likely to find that there are multiple gaps that require manual interventions which delay completion (especially if reviews and escalations are required) and introduce errors because data is reentered. 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 will outperform competitors. Updated technology can improve P2P effectiveness, streamline processes and automate repetitive work. Technology can also improve the efficiency of purchasing and payments processes while ensuring guidelines, controls and regulations are observed and costs are minimized.

The market for P2P software is fragmented and highly competitive across many vendors. Basware positions itself as providing complete visibility across all the flows of money, goods and services to improve efficiency, while enabling more effective and ethical decision-making related to purchasing.

Digital transformation should be more than a slogan. Basware can improve finance and accounting department performance by shifting work done manually 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. P2P is an excellent starting point because it offers a significant return for the time and money invested with limited risk.

Investing in P2P software enhances the strategic value of the finance department. 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 with a purchasing department reporting to them, focus on digitizing P2P processes and assess whether Basware’s offerings can support their efforts.