Optimizing Source-To-Contract Versus Procure-To-Pay With Managed Services


Instituting sound procurement process is an important part of long-term success for any organization. Designed to ensure compliance with corporate policies, the procurement methodologies embraced by companies vary depending on their unique needs. After determining what goods and services firm needs, companies have two options source-to-contract (S2C) and procure-to-pay (P2P). Navigating the nuances of these processes can be time-consuming and complex, and many times companies are turning to managed services to ensure efficiency. This article explores the differences between S2C and P2P and examines how managed services can help organizations optimize their procurement operations.

What is Source-to-Contract?

Source-to-contract is the process of obtaining goods and services that company requires to operate. It usually begins by conducting market analysis and then constructing formal request for proposal (RFP). During this process, companies vet vendors and negotiate with them to determine the best fit in terms of quality, costs, and delivery times. Once the desired supplier is selected, the company typically creates contact to define service parameters and payment details.

What is Procure-to-Pay?

P2P is the process of ordering and paying for goods and services that company requires to function. After receiving the orders, vendors enter their invoices in P2P system to be approved and processed for payment. The P2P process also covers returns, discounts, disputes, and special pricing agreements.

How Can Managed Services Optimize Source-to-Contract Versus Procure-to-Pay?

Managed services are crucial for optimizing an organizations procurement operations. By delegating procurement duties to experts, companies can improve visibility and compliance, reduce costs, and streamline processes. Here is step-by-step guide on how managed services can help companies optimize their S2C and P2P operations.

Step 1: Analyze Current System

The first step is to conduct thorough review of the current S2C and P2P (or spend management) processes and identify the areas of improvement. Doing so will provide companies with the information they need to make informed decisions on how to improve productivity and drive cost savings.

Step 2: Develop Strategy

With heightened understanding of current processes, executives can then develop strategies for achieving their defined goals on the S2C and P2P fronts. Doing so will lay the groundwork for creating the necessary partnerships and processes needed to drive success.

Step 3: Utilize Advanced Tools and Technology

Modern managed services providers typically utilize advanced tools and technology to simplify processes, such as invoice verification and processing, as well as spend analysis and trend monitoring services. This helps to streamline sourcing, procurement, and payment processing.

Step 4: Create Reports

Having the right data is essential in order to optimize spend, streamline processes, and gain strategic advantage in the marketplace. By utilizing comprehensive reporting capabilities, companies are provided with complex data on all aspects of their S2C and P2P operations and can make educated decisions.

Step 5: Utilize Performance Measurement

It is important to have performance monitoring process in place in order to track, measure, and impact various elements of the overall S2C and P2P operation. Metrics should cover broad range of activities to ensure accuracy and using managed services for this process enables visibility of total spend and allows for accountability.

Step 6: Monitor Results

Finally, by closely monitoring the results of the S2C and P2P activities, executives can determine their success. Executives should look for cost savings, improved accuracy, and higher ROI all of which can be achieved through the use of managed services.


Choosing the right S2C and P2P processes can be overwhelming and time-consuming, especially for larger organizations. By leveraging managed services, companies can create an agile and efficient procurement process that lowers costs, improves visibility, and helps to maintain compliance. The steps outlined in this article are an ideal starting point for those looking to gain strategic advantage in todays competitive market.