Looking to streamline your procurement process? Now is the perfect time to begin reviewing your complete source to pay process to increase efficiency, productivity, integration, and revenue.
What is Source to Pay?
Source to Pay is a comprehensive business approach that integrates sourcing, procurement, and accounts payable into a streamlined workflow. It encompasses all activities from initial procurement requests to vendor selection to final invoice reconciliation and is instrumental in keeping costs low and revenue high. A well-defined source to pay process is vital to developing business policies to ensure compliance as well as assist in strategic decision making.
Let’s break it down.
The First Step is Sourcing
The first and most important step in the source to pay process is sourcing which includes identifying suppliers/vendors, negotiating contracts, terms and conditions, and supplier/vendor selection. Factors taken into consideration are, among others: timeliness of arrival of goods, cost of goods/services, proximity to location where goods/services are needed, payment terms, reliability of services/goods, quality standards, regulatory requirements and so forth. Being able to identify these factors is paramount in efficient sourcing. The goal is to secure the best possible terms and conditions for the goods or services needed to satisfy the business requirements.
So, what’s next?
Procurement is the Fun Part
Once the supplier/vendor has been selected, the procurement activities can begin. Terms have been negotiated, contracts/agreements are signed; purchase requisitions are generated, and POs are approved and sent to the suppliers. Supplier relationships are created, maintained, and monitored. Goods and services are ordered and delivered as per terms in the contract and reviewed to ensure accuracy and quality results.
Now for the final step.
Accounts Payable Cuts the Check
Accounts Payable ensures the accuracy of the invoice from the supplier by bouncing the invoice off data on the Purchase Requisition or Purchase Order. Payment is approved and processed timely according to the terms and conditions set forth in the contract/vendor agreement.
Why Does the Source to Pay Process Matter?
The source to pay process helps align procurement activities with your business and organizational goals. It reinforces cost efficiency, manages risks, and helps to ensure compliance. It also helps support strategic decision making to provide greater financial benefits.
Having a solid source to pay process greatly enhances cost efficiency. Payment terms can be negotiated, spending consolidated and overall procurement costs reduced all by selecting the appropriate supplier. The correct supplier selection also reduces risks by meeting quality standards to comply with regulatory requirements. Suppliers can then be evaluated and assessed based on performance and compliance to determine inclusion/exclusion in future procurement requests.
Adherence to internal controls is greatly impacted when utilizing a structured, documented source to pay process. Once an established procedure is developed, the policies and conditions are followed which allows for compliance and transparency thereby reducing the risk of possible legal issues.
Integrating sourcing of suppliers and goods/services with payment processes allows businesses to make more strategic choices: identifying cost savings by comparing different vendors and assessing supplier relationships will enhance and optimize overall business goals.
The data provided by following a source to pay process can be analyzed to identify spending patterns, supplier performance and opportunities for improvement. These data driven insights support strategic decision making and continued process improvement to assist with cost savings and greater financial benefits.
Overall, a complete source to pay process is integral to compliance and risk management as well as reducing procurement costs and is beneficial in forming decisions regarding future opportunities.
Where to Begin?
The source to pay process is often supported by various ERP systems, including Deltek Costpoint which allows for streamlining the entire procurement process. The CRM and Contracts Module works to monitor and capture opportunities and integrates with the Contracts, Materials, Procurement, and Accounts Payable modules to streamline subcontract related requisitions and purchase orders. For example: an opportunity is identified and registered into the CRM and Contracts module. A Contract ID is assigned. The opportunity is awarded, and the contract is initiated. The contract ID assigned to the opportunity flows to the Purchase Requisition and subsequent POs and then to the Accounts Payable module for payment. This streamlined process assists in collecting and accessing data across the entire opportunity lifecycle and aids in faster and better strategic decision making to further increase cost efficiency as well as compliance and risk management.
How to Begin?
Redstone Government Consulting’s team of Costpoint Consultants provides module implementation and support and guides businesses on best practices for accomplishing their companywide source to pay goals. Our Compliance Team is here to offer guidance and advice regarding everything contracts and DCAA related, and our Collaborative Accounting Team can do all the work for you further assisting in overall cost efficiency.
Kim joined Redstone Government Consulting, Inc. as a Costpoint Consultant. Her areas of expertise include many areas and modules within Costpoint. Kim specializes in Accounting, Time & Expense, and Projects with a focus on Expense, Accounts Payable, and Billing.
Kim has over 17 years of experience in government contract accounting and has extensive knowledge of various Costpoint modules: Accounting, Time & Expense, People, and Projects. She has been integral in many Costpoint upgrades and Expense Implementations.
Deltek Time & Expense is the area for which Kim has a passion. Helping employees and coworkers understand and navigate the modules is where she excels. From in-person training to company-specific instruction manuals, Kim ensures her knowledge and expertise trickle down to help empower employees, supervisors, and administrators to feel confident using the Time & Expense module. Her understanding of how the Time and People modules work together translates to aiding in better and more effective relationships with and between Accounting, Payroll, and Human Resources departments.
Kim’s knowledge of Deltek Expense goes past simply knowing the module. Kim is highly knowledgeable in GSA regulations, FTR, and JTR and has contributed to the establishment of Corporate Travel Policies to ensure employee satisfaction and corporate compliance. She has led training sessions for employees and managers and developed company-specific desk manuals for the entering, approving, and processing of Expense Reports.
Kim’s extensive history in Accounts Payable encompasses full cycle AP processes, including voucher processing, assisting with implementing approved purchasing systems, vendor management, 1099 processing, Sales & Use Tax, proposing and implementing procedure changes, and training coworkers.
Kim’s experience with Billing includes working with different billing systems, including WAWF, PLSC2, Transcepta, Morado, and Exostar, and with varying contract types. She has worked closely with all departments to ensure the accuracy and timeliness of company invoices to AR Aging and collection processes.
Kim’s experience utilizing Costpoint will contribute to the continued success of upgrades, implementations, and outsourced accounting services that our clients expect from RGCI. Her knowledge will be beneficial to our customers and their employees.