A Practical Guide To Procure-To-Pay Best Practices For Managed Services
Procure To Pay Best Practice
Procurement is an important process for organizations and business of all sizes, shapes, and industries. Yet, the procurement process can be complex and cumbersome, making it difficult to manage efficiently and effectively especially in the context of Managed Services. The good news is that there are strategies and best practices that can help organizations make the most out of their procure-to-pay process. In this guide, we provide an overview of what it takes to implement efficient procurement processes and utilize procure-to-pay best practices for Managed Services.
Organizations that are looking to streamline their procure-to-pay processes can benefit from Managed Services, as it relieves teams from some of the administrative aspects of procurement, including identifying potential vendors and performing the purchasing transactions online. This then allows organizations to focus on transactions, risk assessment, and cost optimization when engaging with their service providers. With the help of Managed Services platforms, organizations can utilize variety of best practices for their procure-to-pay process, depending on their specific needs and requirements.
Step One: Identify Needs
The first step in establishing an efficient procurement process is determining which services and vendors the organization will need to complete the Procure-to-Pay cycle. Gathering information from various departments, such as IT and Facilities, can be helpful in assessing which vendors/services are vital to the organization and can enable smoother procurement experience. Once the requirements are determined, organizations can begin the process of vetting and selecting vendors, as well as bargaining pricing terms.
Step Two: Vendor Selection
Vendor selection involves the research, comparison, and selection of vendors that offer the services required for the organizations Procure-to-Pay cycle. To evaluate potential vendors, organizations should consider the capabilities of each vendor, the services they offer, and their pricing/payment terms as well. Once the pool of potential vendors has been narrowed down, organizations can then create selection process with clear criteria to thoroughly evaluate their potential vendors. This helps to ensure that quality vendors are chosen and that the contract entered into is beneficial for the organization.
Step Three: Negotiations and Contracts
After the selection process has been completed, organizations can then move on to the negotiationphase of their procure-to-pay process. This is an important step in the cycle, as it allows organizations to discuss and agree on the terms of vendor contract. Negotiations should involve an in-depth review of the vendor’s services, pricing, and payment terms as well as discussion of any clauses that may be included in the final agreement. It is important to note that oftentimes the best price and terms can be obtained when vendors compete for the business.
Step Four: Tender Award
Once negotiations and contracts have been completed, the next step in the process is the Tender Award. This is when the agreed-upon contract is awarded to the vendor, formally recognized, and then signed by both parties. To ensure that all parties have an accurate understanding of the contracted services and remain accountable, contracts must be updated or revised as needed. Additionally, organizations should generally retain records of their contracts for internal audit, compliance, and legal purposes.
Step Five: Payment
The payment stage involves the processing of payments to vendors and monitoring of the payment terms agreed upon. This includes tracking and managing spending, settlements, and invoices. By utilizing automation and Managed Services platforms, organizations can effectively manage their payments and ensure that the payment process is efficient and accurate.
Conclusion
Managed services can simplify and streamline the process of procuring goods and services. While it is important to identify the organizations needs and evaluate and select quality vendors, it is also essential to manage payments and to monitor the payment terms agreed upon. By leveraging procurement best practices and utilizing Managed Services platforms or other automation technologies, organizations can improve their procurement process and ensure that their financial transactions are efficient and secure.
