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How do you benchmark and evaluate your procure-to-pay performance against your peers and competitors?

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Procure-to-pay (P2P) is the process of sourcing, ordering, receiving, and paying for goods and services. It is a vital part of any business that wants to optimize its spending, efficiency, and compliance. But how do you know if your P2P performance is up to par with your peers and competitors? How do you identify your strengths and weaknesses, and set realistic goals for improvement? In this article, we will discuss some best practices for benchmarking and evaluating your P2P performance, and how to use the insights to drive better business outcomes.

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1 Why benchmark your P2P performance?

Benchmarking is the practice of comparing your performance metrics with those of other organizations in your industry, sector, or region. It helps you understand where you stand in terms of cost, quality, speed, and compliance, and what gaps or opportunities exist for improvement. Benchmarking also helps you align your P2P strategy with your business objectives, and communicate your value and impact to your stakeholders.

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2 How to choose the right P2P metrics?

When measuring your P2P performance, it’s important to consider your business goals, maturity level, data availability and quality, and benchmarking sources in order to select the right metrics. Common P2P metrics include cost per invoice, invoice cycle time, first-time match rate, payment on time rate, and supplier satisfaction. Cost per invoice measures the total cost of processing an invoice, including labor, technology, and overhead. Invoice cycle time is the average time it takes to process an invoice from receipt to payment. First-time match rate is the percentage of invoices that match the purchase order and receipt without errors or exceptions. Payment on time rate is the percentage of invoices that are paid within the agreed terms and conditions. Lastly, supplier satisfaction is the level of satisfaction of your suppliers with your P2P process, communication, and relationship.

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3 How to collect and analyze P2P data?

To collect and analyze your P2P data, you need to have a reliable and integrated P2P system that can capture, store, and report on the relevant information. You also need to have a clear and consistent data governance framework that defines the roles, responsibilities, and rules for data collection, validation, and usage. To analyze your P2P data, you need to use appropriate tools and methods, such as dashboards, scorecards, charts, and statistical techniques, to visualize, compare, and interpret the results. You should also look for patterns, trends, outliers, and root causes that can explain your performance and guide your actions.

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4 How to find and use benchmarking sources?

In order to find and use benchmarking sources, you must identify and access data from other organizations that share similar characteristics and challenges as yours. Such sources can include industry reports and surveys published by research firms, associations, or media outlets; peer networks and forums that allow you to exchange best practices and feedback on your performance; and consultants and experts who provide customized and objective advice on your benchmarking process and results.

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5 How to use benchmarking insights to improve your P2P performance?

Benchmarking insights can be used to improve your P2P performance by identifying strengths and weaknesses, and setting realistic goals and targets. Develop action plans and initiatives, based on best practices, lessons learned, and innovation opportunities. Monitor and evaluate progress and impact with KPIs and feedback mechanisms, then celebrate and reward achievements. Communicate your value and impact to stakeholders for a comprehensive approach to improvement.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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