What is Source to Pay (S2P) and why it matters

Source-to-Pay covers the entire chain of procurement activities. From supplier selection and contract management to purchasing, receiving, and paying for goods and services. The process ensures every step is connected, creating a truly end-to-end procurement process. According to John: “In recent years, procurement processes have been widely digitised. That digitalisation enables automation of repetitive tasks and generates significant cost savings. More importantly, it produces valuable data for continuous optimisation.”

A well-designed Source-to-Pay process goes beyond efficiency. It helps organisations create long-term strategic value through insight, collaboration, and control.

The Source-to-Pay process consists of several interlinked phases:

Phase 1: Sourcing
Suppliers are selected based on price, quality, reliability, and sustainability. ISPnext supports this with tender functionality and supplier evaluation tools.

“Finding the right suppliers isn’t just about cost savings,” says John. “It’s also about risk management and long-term partnerships.”

Phase 2: Contract Management
Agreements with suppliers are digitally recorded, ensuring compliance, transparency, and control over renewals and terms.

Phase 3: Procurement
This operational phase includes purchase requests, order approvals, and invoice validation. Automation minimises errors and speeds up processes.

Phase 4: Invoice Processing and Payment
Through automatic matching of purchase orders, receipts, and invoices (3-way matching), processing becomes faster and more accurate.

“Source-to-Pay creates a process that’s not only faster but also more accurate thanks to automated checks,” says John.

ISPnext enables all these steps to be managed within a single platform, seamlessly integrated with ERP systems.

Although the terms are often used interchangeably, there’s a key distinction:

• Procure-to-Pay (P2P) focuses primarily on operational steps: ordering, receiving, and paying.
• Source-to-Pay (S2P) goes further by including supplier selection and contract management.

Thanks to this broader scope, S2P delivers greater visibility, improved procurement optimisation, and stronger, long-term supplier relationships. “Source-to-Pay creates long-term value,” John explains. “It makes organisations more agile, compliant, and future-ready.”

A fully integrated Source-to-Pay software solution brings the entire procurement cycle together in one system. The benefits are clear across all business levels:

• Efficiency and automation: repetitive tasks are automated, freeing teams to focus on strategy.
• Cost savings: smarter supplier selection and stronger contracts deliver direct financial benefits.
• Compliance and risk control: contract monitoring and supplier analytics reduce legal and financial exposure.
• Real-time insights: dashboards and KPIs provide visibility into spend, supplier performance, and obligations.

“Data is the key to success,” stresses John. “When processes and data are integrated in one platform, you create a single source of truth.”

Automating Source-to-Pay increases accuracy, speed, and reliability across the entire process. The intelligent Business Spend Management platform automatically matches, approves, and reports transactions, saving both time and cost.

John adds: “Automation lets you move beyond simple digitalisation. By using data for smart recommendations and benchmarks, the process becomes self-learning and continuously more efficient.”

ISPnext provides best-practice benchmarks such as 80% contract compliance and guidance like ‘No Contract – No Pay’ to improve control and compliance.

One of the main strengths of the ISPnext platform is its seamless integration between Procurement and Finance. Both departments share the same data, KPIs, and analytics. Aligning priorities and improving collaboration. “Ensure that Finance and Procurement use the same data and perform the same spend analytics,” says John.

This integration prevents matching errors, strengthens compliance, and creates a truly connected procurement process.

By combining data and analytics, ISPnext delivers deep insights into spending patterns, supplier performance, and contract compliance. Data-driven dashboards track KPIs such as processing time, payment terms, and contract utilisation. Tailored to each user’s role.

“It’s all about creating value for your organisation,” says John. “With the right approach, you can not only save costs but also grow sustainably.”

A practical example is Louwman Group, which implemented its Source-to-Pay process using ISPnext modules such as AP Automation and Contract Management.