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Here’s Why Your Company Needs Source-to-Pay Automation

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source to pay automation

Did you know that sourcing and payment activities are largely automatable? According to research done by McKinsey & Company, the vast majority of purchasing and payment processing tasks can be automated: 88 percent of tasks in ordering and receiving, and 93 percent of tasks in payment processing. And you might be surprised by just how much of the source-to-pay (S2P) process can be taken over by software – 47 percent of vendor selection and negotiation tasks could be automated.

Clearly, S2P automation is on its way. You might not yet rely on artificial intelligence (AI) to find your suppliers and handle your negotiations, but perhaps the day is coming, and sooner than you think. And that’s a good thing – source-to-pay automation has many benefits for businesses. You’ll save your company time and money, protect your organization from risk and guarantee regulatory compliance.

You’ll Save Time and Money

Source-to-pay processes are just one piece of the larger procurement puzzle. S2P is a process under the larger umbrella of procurement, that emphasizes strong supplier relationships and relies on automation tools to handle many of the tasks associated with sourcing, ordering, receiving, and paying for supplies.

The more you can streamline your supplier relationships, purchasing, and payment activities through automation, the more time and money you and your employees will save. If it takes an employee half an hour to process a paper invoice the old-fashioned way, you could cut that time down to minutes and free up a chunk of that employee’s day for something more complex and engaging – something that AI software can’t do. Automating source-to-pay processes can reduce spend leakage by 3.5 percent, which might not seem like a lot, but it can really add up, especially if the company in question has a large market cap.

You Can Minimize Supply Chain Risk

But just how much of the S2P process can be automated? Sure, ordering and payment are pretty easy to automate, but technology is advanced enough that you can even rely on an S2P software tool to help you choose vendors. A tool might search a database of vendors, using criteria such as their history of regulatory compliance and their ability to measure up to industry standards to weed out suppliers that could introduce supply chain risk.

If there’s one thing we’ve all learned from the world events of the past two years, it’s that strong supply chains are paramount.


S2P automation allows you to build a stronger supply chain of suppliers that have been vetted for their stability, so you can lower your supply chain risk and better ensure business continuity. You’ll have access to a wider pool of qualified suppliers, and you’ll get to take advantage of a fast supplier onboarding process – together, these two things will both add resiliency to your supply chain. If one of your suppliers can’t meet your business needs anymore, you can just use the software to find more qualified suppliers in the database.

A quality S2P interface will allow for all involved to connect on the same platform, where they’ll have access to regulatory documents, contracts, purchase orders, invoices, and payment history. With everything automated, there’s less need to micromanage the software and you can focus your energies on the parts of the process that truly can’t be entrusted to an AI.

You Can Easily Prioritize Regulatory Compliance

With software automatically keeping track of contract provisions and regulatory obligations, it gets a lot easier to put regulatory compliance at the forefront of your operations – which is what you should be doing if you want your business to succeed. Any source-to-pay software you buy should be designed with your industry’s regulatory compliance needs in mind, so that you can protect yourself from policy violations.

Automating S2P processes absolutely helps you improve contract compliance, too. It’s just about impossible to keep track of all your contract provisions as a human being. But the AI can keep track of when payments and deliverables are due, what discounts you quality for, and other often hard-won contract provisions across the entire range of your suppliers. You won’t have to worry about losing out on those savings you negotiated due to poor contract management.

Automating source-to-pay processes can do so much for your company – including allowing you to turn leakage into profit by automating many of the most time-consuming and inefficient tasks of your employees’ days. You’ll be pleasantly surprised by how much money you save, and how much more time everyone has to devote to their most important tasks.


I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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