Purchase-to-Payment Leading Practices

The purchase-to-payment process focuses on requisitioning, purchasing, receiving, paying for and accounting for goods and services. It starts with procuring a good or service to the final steps involved in paying for it.

An effective purchase-to-payment process is built on a set of well-defined and clearly stated business objectives. Key objectives articulate the ideal performance results that the company expects from that process. When determining what process improvements are needed to reach the next level of maturity, evaluators should consider the importance of the process being addressed. As the importance of a process increases, its desired capability increases.

This tool features a number of leading practices for the purchase-to-payment process, including:

• Align purchasing strategies with overall corporate strategies.
• Ensure that purchasing strategies and efforts focus on and parallel corporate strategic objectives.
• Ensure that management and staff act in alignment with the overall long-range company goals.
• Strengthen cash flow by explicitly managing payment dates and terms.
• Estimate the opportunity cost of paying bills before the due date.
• Negotiate payment terms for improved discounts on timely payments.
• Manage accounts payable to support specific cash flow objectives.