Transforming Your Spend Management Through Source-To-Pay Managed Services
WHAT IS SOURCE-TO PAY
Successful financial management is crucial for businesses of any size seeking to stay competitive and remain going concern. For organizations that take on substantial amount of external spending, the process can be complex and demanding of both time and attention. Effective spend management through source-to-pay represents reliable solution for the many issues that arise when the scope of the organizations procurement processes and supplier base grows.
Source-to-pay, also referred to as procurement-to-pay or request-to-pay, is lifecycle concept encompassing the end-to-end process from specifying, finding, ordering, and receiving goods and services from external suppliers, to paying them through accounts payable. This article examines the fundamental principles of source-to-pay and highlights the various advantages offered by managed services focused on intelligent spend management.
Why Source-To-Pay is Vital
todays organizations face numerous challenges when dealing with external spending, especially those operating in industries with very high volumes of procurement activity. The process involves complex and varied functions, requiring data entry, document management, and compliance, as well as staff resources to keep the purchase ledger up to date.
Getting the source-to-pay (STP) process wrong can lead to increased spend, improper payment and order management, contractual issues and compliance breaches. These problems arise due to excessive manual labor, inherent inefficiencies, data inaccuracy, and difficulty tracing where payments are in the pipeline.
A strategic approach to source-to-pay that encompasses and automates the entire process can help organizations to reduce costs, strengthen their operational effectiveness and ensure compliance with taxation and regulatory requirements. This is where managed services for source-to-pay come in.
Benefits of Source-To-Pay Managed Services
Managed Services for source-to-pay refer to business model in which provider takes full responsibility for complete or substantial part of the STP process. This entails taking over the entire purchase process and the associated supplier management.
The managed service partner functions as an extension of the client company, taking care of procurement, order execution and fulfillment, invoice processing and accounts payable, as well as adhering to the contractual responsibilities with vendors.
The benefits of working with dedicated managed service provider are manifold. It enables the organization to make better strategic decisions through efficient budgeting and cash-flow management, allows for better inventory control, and provides access to greater product availability and competitive pricing. Hiring an experienced managed service provider can also take the pressure off operational staff, who can then focus on other higher value-adding activities, such as sourcing and selecting vendors, maintaining supplier relationships and negotiating contracts.
Moreover, the use of managed services helps to ensure secure and compliant system, as well as helping the organization to meet regulations and deadlines consistently. good managed service provider also comes with wealth of data and metrics that brings greater insight and transparency to purchase decisions.
Adopting Managed Service Source-To-Pay Model
Successful onboarding of managed service model for source-to-pay requires careful consideration of the goals, operations and practices of the organization. The first step towards successful implementation is the selection of the right STP managed service provider.
When selecting managed service provider, organizations should always look for relevant experience and good track record. Potential partners should be asked questions to get clearer understanding of their approaches to certain processes, their relationship models with suppliers, their technology infrastructure and reporting capabilities, and how they handle data security and compliance.
The organizationshould also take the time to explore how the proposal offered by the managed service partner fits with the current systems and process. It is important to ensure that the chosen STP model is tailored to the organizations needs and is the best one available to suit its particular requirements.
Conclusion
A robust source-to-pay managed service model can have significant impact on the financial performance of an organization. It provides cost savings that translate into growth, higher profits and reduced risk. The value of the service increases in relation to the volume of the purchase, simplifying and reducing the overall cost of the process.
When transitioning to managed service model for source-to-pay, it is important to be strategic and careful in the selection of the managed service provider. Doing this ensures that the organization gets the services it needs, along with the potential for realizing operational excellence, improved cash flow management, greater cost savings and improved compliance.
