From 5,000 to 1,000 Hours: Procure-to-Pay Processing Load

Modern Slavery: Slaves to Manual Procurement Processes

A mid-sized company that processes 100,000 pages of documents annually would take up to 5,000 person-hours if a document is processed at 3 minutes each. This calculation remains fair even if the company has yet to fully leverage integrated digital capabilities. The 100,000 pages are spread across creating and sending POs, getting PO confirmations, entering data into the ERP, creating GRs, receiving invoices, and processing payment. The end-to-end procure-to-pay activity can be reduced by 80%, from an average of 3 minutes per page down to 36 seconds. These savings matter not only for current conditions but for a better cost base as the business expands — the cost-to-expansion ratio grows more significant as scale widens.

Examining the Seed of Indirect Cost

How does a company spend so much time processing documents? Consider a mid-size food and beverage retail company serving fresh produce to 5 restaurants. The procure-to-pay process begins when the restaurant creates a PR (Purchase Requisition) based on current stock. The PR is approved by the branch manager and converted to a PO by the procurement team. The PO is then printed, stamped with duty stamp (meterai), signed by the procurement manager, and scanned. The scanned PO is sent via email and hardcopy to suppliers. The next day, procurement asks suppliers for order confirmation — if the supplier disapproves, the PO is canceled in the ERP and another one created, repeating the cycle. The average rate of unconfirmed POs is around 30%. If confirmed, procurement creates a PO confirmation document in the ERP.

Once goods are delivered, a GR (Goods Receipt) is created. The hard copy of the GR must be sent to suppliers as the basis for invoicing. Finance receives the invoice with the attached PO, GR, tax invoice, and other supporting documents, and checks whether the data aligns. If documents are incomplete or misaligned, the invoice must be revised, repeating the cycle — the rate of incorrect invoices is around 20%.

The correct invoice then goes through approval: the finance manager double-checks and signs it. Once approved, the invoice is entered into the ERP as the basis of payment — roughly 10% of the time, human error occurs during data entry, requiring the process to repeat. After input, a Payment Request is created, and once approved, payment is executed.

On How the Magic Works

A supplier portal makes the workforce more efficient by bridging document exchange between supplier and buyer. Time is reduced by up to 72%, and by eliminating unnecessary errors — such as incomplete supplier invoices or missing data entry from hardcopy to ERP — an 80% time reduction is achievable.

The food and beverage company does 161 procurement transactions per month, or 1,932 per year, requiring around 5,000 person-hours for procure-to-pay. They were not aware of how much this cost was jeopardizing the business. By using technology, the cost can be reduced significantly.

Integrated into the ERP, every PR created gets approved via Paper. The approved PR can be converted to a PO and synced automatically between the ERP and Paper. Our approval system is backed by notifications accessible via mobile to speed up approvals. After approval, multiple POs can be stamped and sent at once via WhatsApp, email, and SMS — suppliers receive and confirm the PO on mobile, then proceed to delivery.

Received goods are marked as a GR in the ERP, synced to Paper. After the GR is connected to the PO, it is sent digitally to the supplier as the basis for invoicing — a customized rule means only a complete invoice can be sent to the buyer. The Paper system automatically checks invoice information against the GR and PO. Once correct, the approval workflow kicks in, and the finance team can make one payment request covering up to 50 invoices, for full or partial payment, approved and triggered at the bank platform in a single pass.