Analysts anticipate that Source to Pay software will see a rise in adoption amongst SMEs this year and beyond. To quickly recap, Source-to-Pay takes the legwork out of the entire sourcing and purchasing cycle. I see it addressing five critical purchasing pain points which are the essential components of success and ROI from bringing this software on board. In my first post on this topic I discussed the initial pain point in the cycle – selecting your preferred suppliers. In this second post I will outline the next two pain points and remedies.

Once an organisation has sourced its preferred suppliers its next challenge is ensuring it enters into sound and acceptable contracts and then manages the adherence to these contracts on a continual basis. Contracts should not be simply left to run - managing them ensures that both parties meet their agreed obligations.

But contracts are frequently complex and may involve multiple products or services or last a long time and consume many resources. Keeping a constant check on whether they are being adhered to manually throughout every purchase and payment is complex and very time consuming, often resulting in slippages of service such as delivery or pricing, or payment terms on the side of the buyer.

If suppliers become aware that they are not being monitored against their contractual obligations they may make less effort to comply. Equally the buyer organisation might find itself purchasing services outside of the terms agreed in the existing contract.

Because Source to Pay electronically captures the supplier selection process, which involves the agreement and setting of terms, the software can then also help the organisation to police adherence to those terms. They are stored in the system and so they can be used to automatically check that purchases are payments are within terms and flag occurrences when they are not.

With effective contracts in place employees are ready to begin buying the agreed products and services they need. Here lies the next pain point requiring remedy. People can be resistant to change and may not want to use newly agreed suppliers or products when they have a relationship with a supplier already. The challenge here is to gain the trust of the buyer to ensure they purchase goods and services in a compliant way and avoid maverick spending with unapproved suppliers.

A well designed Source to Pay platform enables this by providing an intuitive and simple to use buying system that acts very much like an online shopping website or Amazon. This means people need no training and can pick up the system quickly, soon realising it actually makes their lives easier, not harder. The system also ensures that people buy in line with agreed policies. For example buyers might be required to gain three competitive quotes on spend items over a certain value.

Cost effective and low risk purchasing requires a joined up process from supplier selection to final payment. Source to Pay software remedies a number of common pain points that exist along the way, creating costs and resource bottlenecks for the business. In my final post I’ll be talking about the last two remedies – overcoming manual financial processes and implementing a continual purchasing improvement cycle.

Source to Pay: five procurement remedies for small to medium enterprises