How DSSI’s procure-to-pay process drives compliance and reduces risk

We work with dozens of enterprise manufacturing businesses across North America and the EU and before embarking upon our relationship, their legal counsel often ask us to outline how our procure-to-pay process works when it comes to statements of work (SoWs), liability and our financial model. We’ve therefore pulled together what you can expect when you work with DSSI to optimize your procurement process. 

What is the procure to pay process?

The procure-to-pay (P2P) process is a critical business cycle that encompasses the steps organizations follow to procure goods and services and make payments to suppliers. This process is integral to managing business expenditures and ensuring efficient transaction workflows from start to finish. The P2P process breaks down as follows:

• Identifying needs: The process begins with identifying the need for specific goods or services within the organization. This step involves determining what items are required, the quantity needed, and the timeline for procurement.
• Selecting suppliers: Once the needs are identified, the next step is to find and select suppliers who can provide the required goods or services. This involves researching potential suppliers, evaluating their offerings, and selecting the most suitable ones based on factors like price, quality and delivery terms.
• Creating purchase requisition: After selecting a supplier, a purchase requisition is created. This document details the goods or services needed and must be approved internally, typically by the department head or procurement manager. This approval is crucial as it validates the need and the budget for the procurement.
• Issuing purchase order: With the requisition approved, a formal purchase order (PO) is issued to the supplier. The PO serves as an official request for the goods or services and includes detailed information such as product types, quantities, agreed prices and delivery schedules.
• Receiving goods/services: Upon delivery of the goods or provision of services, the receiving department checks them against the PO to ensure that the order is complete and meets the specified requirements. Any discrepancies or damages are noted and communicated to the supplier for resolution.
• Processing the supplier invoice: Following the receipt of goods or services, the supplier sends an invoice to the organization. This invoice details the amounts due based on the delivered goods or services and must align with the terms outlined in the PO.
• Invoicing approval: The received invoice undergoes a verification process where it is matched against the PO and the goods receipt note to ensure all details are correct. This step is vital to prevent errors and ensure that only services and goods actually received are paid for.
• Making payment: Once the invoice is approved, payment is processed according to the agreed terms with the supplier. This final step in the P2P process involves transferring funds to the supplier, typically through electronic means, to settle the outstanding amount.

The P2P process is essential for maintaining effective control over organizational spending and ensuring that procurement activities are carried out efficiently and transparently. Automating this process with DSSI leads to significant improvements in procurement speed, accuracy, and cost-efficiency.

Procure to pay compliance at speed

But how do we work together with your team to ensure compliance at speed? By ensuring that all aspects of project management, from the statement of work to financial details, are meticulously outlined and managed. Here’s how DSSI addresses these critical areas:

Clearly defined statement of work 

We understand that for any company, a clearly defined SOW is crucial. DSSI ensures that both ourselves and the customer have a mutual understanding of the project requirements. The SOW typically includes detailed descriptions of the project scope, deliverables, timelines and specific responsibilities of all parties involved. This precision in defining the SOW helps in setting clear expectations and serves as a foundational document that guides the entire project lifecycle.

Establishing liability

In legal terms, establishing liability is paramount. DSSI addresses this by incorporating comprehensive clauses in the SOW and the overarching contract that clearly delineate liabilities, indemnities and warranty terms. This is particularly important in legal settings where the implications of fault, responsibility and warranties carry significant consequences. By clearly defining these terms, we ensure that all parties are aware of their legal obligations and the extent of their liability, thus safeguarding all involved from potential legal disputes.

Clearly defined financial model

We provide a transparent and clearly defined financial model that is crucial for managing budgets effectively. This model includes:

• Compensation: Detailed breakdowns of payment structures for services rendered, ensuring clarity in how much and when parties are to be compensated.
• Savings guarantees: Where applicable, DSSI outlines potential savings guarantees, providing legal councils with confidence in the cost-effectiveness of their investment.
• Rebates: Information on any rebates that might be available through the use of our services, adding an additional financial benefit.
• Payment terms: Clear terms regarding payment schedules and other related financial policies are specified, which helps in maintaining financial discipline and ensuring smooth cash flow management. We understand that establishing longer payment terms is crucial for the enterprises we work with, and we are adept at securing these on our clients’ behalf. See how we saved one manufacturer over 16% here. 

By addressing these areas, DSSI provides its customers with a robust framework that supports effective project management, operational efficiency, compliance and risk management, ensuring a strong relationship that delivers. If you have any questions, please feel free to get in touch with our team.