What is procure-to-pay? A full guide on how the P2P process works

Procure-to-pay, or P2P, is the process businesses use to request, approve, purchase, receive, and pay for goods and services. It connects procurement and accounts payable into one continuous flow—ensuring purchases are properly authorized, documented, and paid for on time.

When done well, P2P creates structure, control, and visibility across your company’s spending. It helps teams avoid budget surprises, reduce manual work, and strengthen supplier relationships.

In this guide, we’ll break down each stage of the P2P process, show how leading companies manage it at scale, and explore how procurement software can help eliminate errors, speed up approvals, and surface opportunities to save.

What is procure-to-pay (P2P) in procurement?

The P2P process is part of the larger source-to-pay (S2P) process, which covers the stages of sourcing, vetting, and negotiating with potential vendors. P2P kicks off after these stages have been completed and typically begins once you’ve signed a contract with your chosen vendor to purchase goods or services from them.

P2P is crucial for business operations because it brings structure and control to spending. Here's how it helps:

• Efficiency: Standardizes purchasing workflows, reduces duplicate efforts, and speeds up processing
• Compliance: Creates audit trails and enforces approval hierarchies to prevent unauthorized spending
• Cost control: Improves visibility into spending, prevents duplicate payments, and helps capture early payment discounts

Some key terms in the P2P process include procurement (the overall function of obtaining goods and services), requisition (a formal request to purchase items or services), purchase order (an official document sent to suppliers confirming what's being bought), and invoice (a bill from suppliers requesting payment for delivered goods or services).

Why is procure-to-pay important?

An increasing number of businesses are exploring how they can improve the efficiency of their P2P processes with automation to save significant time and money and glean more insight into their finances.

P2P accomplishes this by keeping everyone on the same page in terms of what has already been received, what still needs to be purchased, and where everything is in the process. This structure and alignment across teams benefits your company in a variety of ways, from avoiding errors, wasted time, and late fees to allowing you to take advantage of discounts.

What are the stages of the procure-to-pay process?

The procure to pay process follows a clear, step-by-step workflow that guides organizations from identifying a need to completing payment. Each stage builds on the last, ensuring financial control and operational efficiency:

1. Create purchase order/spot buy: Once the purchase request is reviewed and the contract with the vendor is finalized, your finance team issues a purchase order (PO) for goods and services. If the requested goods and services have characteristics such as one-time unique purchases and low-value commodities, then your team can perform a spot buy.
2. Purchase order approval: Purchase orders are now sent through an approval chain. Upon the vendor's confirmation of the purchase order, a legally binding contract is activated.
3. Receipt of goods: Next, the vendor delivers the specified goods and services, which are then inspected by your buyer. The acceptance or rejection of the receipt of goods adheres to the criteria specified in the purchasing contract. Then, a ‌receipt is sent to your accounts payable team.
4. Invoice submission and approval: Your AP team approves the invoices using your preferred invoice matching method. This might be 2-way matching, which checks the vendor's invoice against the details of the purchase order, or 3-way matching, which compares the details of the purchase order, the invoice, and the goods receipt before making the vendor payment.
5. Vendor payment: Upon receiving an approved invoice, your finance team will process the payment. A payment made to a vendor will fall into one of the following five types: advance, partial, installment, final, or holdback/retention payments.

What is an example of procure-to-pay?

At Nevada Partnership for Homeless Youth (NPHY), a program manager needed to purchase $10,000 worth of bus passes for an upcoming event. It wasn’t a routine buy—this one-time purchase had to be approved, sourced quickly, and properly documented. Prior to using procurement software, NPHY had a manual process that looked like this:

But with automation, here’s how the full procure-to-pay process becomes streamlined for NPHY:

• Request submitted: The manager submitted a formal purchase request to NPHY’s purchasing department, outlining the purpose of the spend, vendor preferences, and expected delivery timeline
• Request approved: Procurement reviewed the request, confirmed the need, and began comparing quotes from multiple suppliers to ensure the organization was getting fair pricing and meeting compliance requirements
• PO created: Once the preferred supplier was selected, the team created a purchase order and routed it to finance for approval—ensuring the spend aligned with budget and internal policy
• PO sent to supplier: Upon approval from the finance team, the purchase order is transmitted to the supplier
• Receipt of goods: The supplier delivered the bus passes on time. The manager checked that everything matched the request and submitted a goods receipt confirmation to accounts payable
• Receipt of invoice: The supplier sent an invoice for the order. Accounts payable verified the invoice against both the PO and the receipt—ensuring everything lined up before issuing payment
• Vendor payment: With the three-way match confirmed, finance disbursed the $10,000 payment, closing out the transaction

Procure-to-pay vs. accounts payable: What's the difference?

P2P covers the entire procurement process, from the initial requisitioning of goods and services to the final payment to suppliers. Accounts payable, on the other hand, is focused specifically on the payment side of the financial management process. It involves managing and recording financial obligations to suppliers.

In other words, AP primarily deals with the post-procurement phase, focusing on the processing and payment of invoices, while P2P encompasses the procurement process from start to finish.

Understanding this difference clarifies organizational responsibilities. When companies mention "procurement transformation," they usually mean optimizing the entire P2P process. "AP automation" focuses on streamlining invoice processing and payments.

The relationship between these functions shows why cross-departmental collaboration is essential for effective financial management. Different teams may handle various stages, but they must work together to control spending and ensure suppliers are paid correctly and on time.

What are the main challenges in the procure to pay process?

Challenges in the P2P process can impact financial health, supplier relationships, and operational efficiency. Identifying and addressing these issues is key to maintaining control and maximizing value from purchases.

P2P challenges usually fall into three main categories:

Financial challenges:

• Invoice exceptions and discrepancies cause delays and may lead to missed early payment discounts
• Maverick spending—purchases outside established channels—often results in higher prices and lost volume discounts
• Duplicate payments can occur when invoice controls fail, leading to unnecessary cash outflows

Operational challenges:

• Manual, paper-based processes create bottlenecks and slow down processing
• Poor visibility makes it hard to track requests and spot delays
• Siloed systems require duplicate data entry and prevent end-to-end monitoring
• Lengthy approval cycles delay purchases and frustrate stakeholders and suppliers

Compliance challenges:

• Inadequate documentation creates audit risks and makes approvals hard to verify
• Inconsistent policy enforcement leads to confusion and non-compliant purchases
• Regulatory requirements, especially in industries like healthcare or government, add complexity

Among these, maverick spending and manual processes often have the biggest impact. Maverick spending undermines contracts and causes financial leakage, while manual processes consume staff time and introduce errors.

Small businesses may feel that comprehensive P2P systems are out of reach, but even basic automation of approvals can bring big benefits. Larger organizations face complexity, needing standardized processes across departments while staying flexible for different business units.

Recognizing these challenges is the first step toward improvement. Organizations that address P2P issues can reduce costs, capture more discounts, strengthen supplier relationships, and gain better visibility into spending. The best results come from combining process redesign, technology, and ongoing monitoring to keep improving P2P performance.

How can automation software improve the procure-to-pay process?

An increasing number of companies are harnessing technology to automate various manual tasks within the P2P process, particularly invoicing. These P2P solutions streamline the entire end-to-end process, even consolidating AP with P2P.

Successful P2P automation integrates with enterprise resource planning (ERP) systems and financial tools for seamless information flow, offers mobile accessibility for approvals and status checks, and provides configurable workflows that adapt to different purchase types and thresholds. Supplier portals also give vendors visibility into orders and payments, reducing inquiries and strengthening relationships.

To measure the impact of P2P automation, track these key performance indicators:

• Average processing time: How long it takes to complete the P2P cycle from requisition to payment. Faster times mean better efficiency and supplier relationships
• Invoice exception rate: The percentage of invoices needing manual intervention. Lower rates indicate better controls and data accuracy
• Early payment discounts captured: Shows how well the organization takes advantage of supplier discounts—directly impacting the bottom line
• Cost per invoice: Total processing expense divided by invoice volume, reflecting overall efficiency

Organizations that measure and refine their automated workflows can gain a real edge through more efficient procurement operations.

Example of procurement software

Procurement software transforms the P2P process from a manual, email-driven system into an automated, trackable workflow. For nonprofits like Nevada Partnership for Homeless Youth (NPHY), these tools make it easier to manage urgent, high-volume purchases—without losing control or time.

In another example, NPHY needed to pay rent on behalf of 13 clients. That meant quickly routing approvals, tracking documentation, and moving funds with full transparency. With Ramp’s procurement software, the process took just four steps:

1. An employee submitted a procurement request directly in Ramp
2. The request was automatically routed to the right approvers, with each approval logged in an audit-ready history
3. Once approved, a purchase order was generated automatically
4. Payment was processed, and 13 rent payments were completed in under an hour

Because Ramp integrates directly with ERPs—including multi-entity setups—each transaction was automatically synced, with no duplicate entry or extra reconciliation work for finance.

Beyond speed, procurement software like Ramp also brings structure and insight to the procurement process. Built-in analytics, policy enforcement, and approval workflows help improve compliance and give finance leaders a clearer view of how money moves across the organization.

How can Ramp Procurement save my company time and money?

Ramp Procurement helps your team eliminate manual work across the entire P2P process—from purchase requests to vendor payments. By consolidating procurement, bill pay, and vendor management into one platform, you get real-time visibility into spend and tighter control over every transaction.

With Ramp, you can reduce spend through price intelligence and other savings insights, track expenses, and enforce compliance by building your team’s policies into tailored procurement workflows. Plus, you can set up custom spend controls to guarantee employees always stay within budget.

And the impact adds up fast. Just ask med tech company Precision Neuroscience, who replaced a fragmented, labor-intensive process with Ramp’s automation:

• PO turnaround time: Cut by 50%
• Data entry: Saved minutes per PO—20 to 30 times a week
• Month-end close: Reduced to just 1–2 days
• Tools required: Down from 4 platforms to 1

Beyond time savings, Ramp gave their team clearer financial visibility, reduced reliance on external accounting support, and eliminated costly errors caused by duplicate or inconsistent manual work.

If you’re ready to optimize how your company purchases, pays, and tracks spend, Ramp Procurement can help.