Running a successful hospitality business like a hotel that includes restaurants and bars on its grounds, is a tremendous undertaking, a lot of hard work full of painstaking detail. There are so many factors that go into making such a complex enterprise run smoothly that it takes a large staff with expert training to pull it all off, and it can be exhausting! Fortunately, modern technology has gifted the hospitality industry with some amazing new tools that make things a lot easier!
One of the most exciting of these tools is a software system called procure to pay, or P2P for short. It entails the integration of purchasing and accounts payable systems to make complicated tasks like managing hospitality Inventory and making orders to fill each department’s needs much more streamlined, which greatly improves efficiency while also reducing expenses. The digital procure-to-pay process makes everything from requisition, to receipt, to payment much more efficient.
Let’s take a look at the steps that the procure to pay process helps the staff go through to make it all happen!
- Supply Management – This is the process of identifying, acquiring, and managing all of the various resources and suppliers that a hospitality business needs to operate. Supply Management involves purchasing physical goods, sharing information, communicating with suppliers and critical services like storage and delivery, and all of the many other resources that the operation requires to function and grow. P2P provides an efficient method of effectively allocating those resources while helping to control costs and manage risk.
- Vendor Selection – This is the process of choosing which suppliers and service providers are best suited to fulfil a hospitality business’s complex needs. Part of the process involves laying out specific criteria that must be met like cost, reliability, quality, and the ability to handle the necessary demands. Potential vendors are evaluated by a course of assessments until the best candidate for fulfilling needs and expectations is chosen.
- Requisition – This process involves a department or organization within an enterprise placing a request for the goods or services they need. A purchase requisition is filled out that details the items, their quantity, and their specifications, which is then given to the office tasked with deciding if the requisition request will be fulfilled, or if changes need to be made, and so on. If the requisition is approved the procurement will proceed.
- Purchase Order – usually called a PO for short, this is an official document that lists all of the specific details pertaining to the exact goods or services that have been approved to be acquired from the vendors. The PO will include the quantities, prices, requested delivery dates, and the terms of payment. The authorized PO document will then act as a contractual agreement between the purchaser and the vendor throughout the process of procurement.
- Receiving – This is where the goods or services purchased from a vendor arrive, their condition is checked, and their acceptance is confirmed or denied. The process involves inspecting, documenting and checking the delivered items against what is listed on the PO. In the case of physical items they will undergo an examination of their quality before being accepting into inventory.
- Invoice Reconciliation – This is the process of comparing the invoices of the received goods and services to make sure they are accurate in accordance with the purchase orders, receipts, and other pertinent documents and that there are no discrepancies. The quantities, prices, and any discounts will be reconciled and verified so that the goods or services received can be approved and payment made.
- Accounts Payable – Often called AP for short, this is the final step in the procure to pay process. When the invoice has been reconciled, the AP department issues the payment to the supplier according to the terms established. The AP is also responsible for recording that the payment in accounting system.
The old way of manually managing each of the steps in the procure to pay process was time-consuming and complicated. The exhausting processes were paper-based which made them prone to errors and delays. By digitizing the procure to pay process you can enhance efficiency, reduce errors and increase transparency throughout your hospitality enterprise.
The procure to pay software facilitates faster procurement cycles by streamlining approvals, speeding up transaction processes, and automating formerly time and energy consumptive workflows. In addition, it provides data visibility in real-time, which enables more informed decision-making, facilitates cost control, and improves compliance.
By implementing procure to pay automation in your hospitality business you will gain significant benefits like the following:
- Better Visibility -Procure to pay automation allows you to monitor the process in real-time so you can see spend analysis, and order and invoice tracking right as it’s happening. The level of transparency this affords leads to improved cash flow management and insights into areas that could use improvement.
- Efficiency – By replacing paper-based processes with digital procure to pay software your procurement cycle will gain much greater efficiency, leading to faster order fulfilment and supplier payments.
- Improved Supplier Relationships – By automating the pay to procure process you can reduce errors, lost invoices, and calls to vendors to request status reports on invoices. The ability to make your payments faster can also boost the satisfaction that your supplier feels when doing business with you, an improved relationship that might unlock discounts and promotions that are more in your favour.
- Reduces Expenses – The implementation of procure to pay automation software can make the processes run faster and more error free which will reduce your expenses as the costs associated with manual paperwork, data entry, and other inefficient methods are negated.
- Improved Data Analysis – Procure to pay automation software gives you the opportunity to take advantage of its compiled and real time reported data to keep track of and analyse key metrics like spending, supplier performance, and resource consumption.
There are even more things that automated procure to pay software can do for your hospitality business, give it a try!
