The Procure to Pay (P2P) process is the lifeblood of property management operations. It represents the journey from identifying a need to source necessary goods or services to making payments while maintaining financial accuracy.
In the context of property management, P2P becomes a critical component. The system ensures you have the necessary supplies, services, and maintenance to keep your properties in top-notch condition. It also means you only pay for the goods and services you order, which keeps your cash flowing.
Join us here at Cloudfox as we explore the various stages, the benefits, and even the unique aspects of P2P specific to property management.
Share this article:
Understanding the P2P process is not just about jargon; it's about ensuring cost-effective operations, maintaining relationships with suppliers, and ensuring the smooth day-to-day functioning of your properties.
Now, let's take a closer look at each stage of the P2P process, starting with sourcing and procurement.
The Procure to Pay (P2P) process can be broken down into several key stages, each playing a role in the overall efficiency of property management operations.
In property management, sourcing and procurement are the first steps in the P2P journey. This stage involves identifying the needs of your properties, whether it's maintenance supplies, equipment, or services, and then finding suitable suppliers or vendors.
Here are some strategies to optimise this stage:
Once you've identified your needs and selected suppliers, the next step is managing purchase orders. This stage involves creating and tracking purchase orders to ensure that the right items are ordered, quantities are correct, and delivery is on time.
Through purchase order efficiency, the approvals you need are easier to acquire and less likely to face delays.
Efficiency is key in purchase order management:
Invoices are the financial record of the goods or services received. Proper invoice processing ensures accurate payments and transparency in financial transactions.
When designing your system, ensure you account for who is involved in your account management and how they interact with invoices and their data. That will help you refine your system for maximum efficiency.
This final stage involves making payments to suppliers and reconciling these payments with the invoices. It's where financial accuracy and compliance take centre stage. Here are some things to consider:
Remember, at Cloudfox, we can set up your property management solutions and do all of your accounting - so if this all sounds like a headache, let us do the heavy lifting!
An effective procure to pay (P2P) process can yield a wide range of benefits for property management, making it a crucial aspect of your operations.
Efficient P2P processes help in controlling costs across the board. Streamlining sourcing, procurement, and invoice management lets you identify cost savings and negotiate better terms with suppliers.
Further cost-saving opportunities:
A smooth P2P process fosters strong relationships with suppliers. That can lead to better terms, priority service, and more reliable partnerships.
Your P2P covers many departments – operations, marketing, IT, and finance so clear processes are important.
Effective P2P processes provide a clear view of your property management finances and operations. This transparency is vital for making informed decisions.
P2P helps you:
Property management involves adhering to regulations and compliance standards. A well-structured P2P process helps ensure you meet these requirements, whether regulatory, fraud prevention or audit readiness.
With these benefits in mind, let's explore the core principles of procure to pay, often called the "3 Cs."
The "3 Cs" are a concise way to remember the fundamental principles within the procure to pay process. Because it is concise, it is often the most preferred way to explain and remember what P2P means.
As we've explored the "3 Cs," it's essential to understand another set of guiding principles in P2P, often called the "6 Rs."
The "6 Rs" or P2P are another way to consider the "3 Cs" above. Some prefer to think of the P2P process as a more detailed stepped process - the 6 Rs give us that.
Understanding these "6 Rs" empowers property management professionals to navigate the P2P process effectively.
Let's address another common question: the difference between procure to pay (P2P) and purchase to pay (P2P) in property management.
Procure to pay (P2P) and purchase to pay (P2P) are often used interchangeably, but they have different meanings and implications in property management.
In this case, we are looking at the process from a procurement focus, from identifying needs to supplier selection. It places significant importance on building strong supplier relationships for cost-effective and reliable sourcing.
When you use the term to focus on payment, you concentrate on invoice processing to reconciliation. It strongly emphasises financial control, accuracy, and accounting and budgeting standards compliance.
In property management, these two processes often intersect, forming a comprehensive approach to managing the financial aspects of operations. It gives you a clearer picture of managing supply alongside your budget.
It would help if you had a robust accounting solution to ensure that your procure to pay procedure operates effectively. We always recommend Xero. With strategic integration partners like ApprovalMax, you can have a system that helps you automate much of your P2P workflow while delivering high-touch reporting.
If you need a trusted Xero partner to help you set up, fill in the contact form below.
Your day-to-day bookkeeping process will also need some refining. Let's handle all that for you for a fixed monthly fee!
We are Cloudfox. We offer specialist systems and finance expertise for operational property businesses of scale.