What is Source-to-Pay?

The main goal of Source-to-Pay is to improve the entire procurement chain, both operationally and strategically. Through automation and digitalisation, organisations get a grip on spending, comply more easily with regulations and strengthen supplier relationships.

Three central objectives of a Source-to-Pay solution are:

• Cost savings
  Through smart sourcing, better contract management and digital invoice processing, waste and inefficiencies are reduced.
• Compliance and risk management
  Source-to-Pay makes it easier to comply with regulations such as ESG criteria and CSRD. Organisations identify and manage risks based on up-to-date data.
• Insight through data
  Thanks to one central environment, a single source of truth, decision-making is based on reliable, real-time information.

Source-to-Pay and Procure-to-Pay are regularly mixed up, but there is an important difference.

Procure-to-Pay (P2P) focuses mainly on the operational part of the process: from requesting goods or services to paying the invoice. Think of creating orders, approving receipts and processing payments.

Source-to-Pay (S2P), on the other hand, starts before procurement, when selecting suppliers and signing contracts. These strategic stages are an essential part of the process. As a result, Source-to-Pay offers a broader, integrated perspective on the entire procurement cycle.

With a Source-to-Pay solution, organisations can not only manage transactions, but also create value through better supplier choices, policy compliance and long-term partnerships.

• Efficiency and automation
  Repetitive operations are automated, allowing employees to focus on strategic work.
• Cost savings
  Better supplier selection and tighter contract terms reduce overall costs.
• Compliance and risk management
  Audit logs, supplier analyses and contract monitoring reduce legal and financial risks.
• Real-time insight
  Source-to-Pay software provides up-to-date reports on expenditure, supplier performance and contract obligations.

A successful Source-to-Pay implementation starts with understanding the current processes. By identifying bottlenecks and setting objectives, it becomes clear which solution is the best fit.

Step 1: Analysis of the existing situation
Which tools are currently being used? Where are delays or errors? What requirements do stakeholders have?

Step 2: Selecting a solution
Choose a source-to-pay platform that fits the organisation, the ERP system and the scale of operations.

Step 3: Configuration and testing
Align workflows with internal processes and test the platform with key users.

Step 4: Training and adoption
Make sure employees understand how the system works. A high adoption rate determines ultimate success.

Step 5: Continuous optimisation
Measure results, adjust workflows and expand the system with additional modules.

John advises: "The impact of a source-to-pay implementation depends on good preparation. Involve all departments for a smooth transition." With this approach, added value is created quickly: costs fall, processes run smoothly and decisions are made on an informed basis.

Wondering how Louwman Group set up their Source-to-Pay process with modules such as AP Automation and Contract Management? Read the customer case and discover their approach.

The Source-to-Pay process consists of several interconnected phases. Each phase contributes to optimising the procurement strategy and achieving control over spending and supplier relationships.

Phase 1: sourcing
In this first phase, suppliers are selected on the basis of price, quality, sustainability and reliability. Source-to-Pay software supports in carrying out tender processes and in assessing supplier performance.
‘Finding the right suppliers is not just about cutting costs,’ says John. ‘It is also about risk management and long-term partnerships that add value.’

Phase 2: contract management
An essential component within Source-to-Pay is contract management. Agreements with suppliers are recorded in central systems. This prevents ambiguities, ensures compliance and makes it easy to manage renewals and conditions.

Phase 3: procurement (Procure-to-Pay)
This operational phase includes the actual ordering of goods or services. Approved order requests, receipt registration and invoice approval are at its core. Source-to-Pay makes this process clear and prevents errors.

Phase 4: invoice processing and payment
Finally, invoices are checked and processed. Automatic matching of purchase order, receipt and invoice (3-way matching) makes this process faster and more accurate.

A well-designed Source-to-Pay system ensures that all these phases fit together seamlessly. This not only saves time, but also creates one central source of truth for procurement data.

More and more organisations are opting for Source-to-Pay solutions to get a grip on procurement and payments. The benefits extend beyond efficiency: it's about compliance, risk mitigation and strategic value creation.

At ISPnext, we support companies with a scalable Source-to-Pay solution that connects to existing ERP systems such as SAP, Infor and Exact. Our software helps structure processes, centralise data and improve collaboration between procurement and finance.

"It's all about creating value for your organisation," concludes John. ‘With the right approach in Source-to-Pay, you can not only save money, but also grow sustainably."

Curious about what our Source-to-Pay software can do for your organisation? Schedule a demo or contact us.