Understanding Procurement and Procure to Pay
What is procurement?
Procurement refers to the acquisition of goods or services, typically within the business realm. Procurement includes everything from sourcing goods and services to negotiating terms, ordering, ensuring accurate delivery and quality, and managing payments. There are many details and sub-activities included in this process.
Procurement includes to the whole picture, but an organization’s procurement solution may or may not include many different components depending on the business. For example, a manufacturing plant may have different procurement needs than a film studio, but both must acquire goods and services to be successful.
Because businesses all have different needs, procurement solutions should be custom to the needs of the business rather than one-size-fits-all. Today, e-procurement is the cloud procurement software to help businesses complete their procurement digitally.
What is procure to pay?
Procure-to-pay refers to a portion of procurement that excludes sourcing. So, once a business has established their sources, companies will look to a procure-to-pay solution to automate the rest of their procure-to-pay process.
Procure to pay software helps companies manage their purchasing process by digitally placing orders, managing approvals, and tracking shipments and payments. Tools like 3-way checks between purchase order, goods receipts, and invoices help companies have better control and insight into their overall procurement efforts.
Understanding the exact definitions of procurement vs. procure-to-pay is valuable, even though many use a variety of procurement-related terms interchangeably. Procurement is a very inclusive word that can refer to a wide variety of acquisition activities. Procure-to-pay is more focused on the activities that take purchasers from ordering to purchasing their needs.
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