How the Source-to-Pay Process Works

Sometimes the procurement department can be a bit more complicated than an average person understands. Many companies end up hiring a Coupa consultant to help them figure it all out and show them how to get the most out of their spending practices. Regardless of how a company learns how to implement its source-to-pay process, what counts the most is that they do understand how it all works so that they save money instead of wasting it.

What Is Source To Pay?

The source-to-pay strategy of a company can either make or break the entire budget. In most cases, the ultimate goal of a company is to pay as little as possible and bring in as much revenue as possible. The less money that is spent the more money that is left for the company. When even more money comes into the business in addition to the savings, the result is a perfect example of how efficient a business can be if they strategize the way they spend.

The source-to-pay process consists of every component of the procurement process from sourcing the goods and services through the end where the goods and services are paid for. There are 4 basic steps that all businesses should implement into their strategies regardless of how big or small they are.

  • Planning
  • Sourcing
  • Buying
  • Paying

The planning step is the most important part of the process because it allows the company to get a clear overview of what is happening with the spending of the company, what the company wants, and how to spend in the way that will be most beneficial to the entire establishment.

For example, when a group of people get together and discuss the greatest outcome for a task the entire process of the steps between setting the goal and accomplishing the goal becomes a vision for an entire team. There could be members of that team that know more about a topic than the next person and the way that the process pans out could be very different than what would be expected if the endeavor was not planned out and agreed upon by the group.

Planning the entire strategy will help to:

  • Determine issues before they start
  • Locate resources for each step
  • Designate people to specific tasks
  • Create a system that has few surprises

Although the act of planning a strategy may seem daunting and wasteful, it can actually speed up and condense the entire process, which in turn, saves money and resources.

Sourcing the Sources

When the planning phase of the process is finalized, the next step will ultimately be to find the best, most useful sources that are available for the company. Whether it is cleaning supplies or outsourced coding services the places where you get the resources are crucial to the benefit of the company.

There is powerful software available that can just about automate the entire sourcing process. Whether a company uses artificial intelligence to find the best sources or calls around on the phone until they get the best ones is entirely optional, however, the way that software sifts through trillions of pieces of data and generates the best possible sources for a company within a matter of minutes saves a lot of time.

Getting great sources means finding:

  • Great prices
  • Dependable vendors
  • Quality goods and services
  • Deals and specials

Sourcing software can be programmed to seek out the perfect sources for the needs of the company and even contact the sources for a discussion – or automated contracting.

One of the most important assets of a company is to have the ability to find dependable sources that don’t run out of supplies and don’t renege on their deals. Having a software application that can quickly find the right sources as opposed to having to seek out new sources at the drop of a hat is a huge benefit.

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In any event, some of the problems that companies find with their sources are:

  • The vendor raises prices without notice
  • The vendor is unavailable for transactions
  • The vendor continually lacks the goods or services that are required

When the organization depends solely on their procurement procedure that is already in progress and has been pulling from the same sources for the last several months or even years they trap themselves in a place where they depend on shoddy sources for the things that they need for their business to work.

Discovering fresh, new sources can be great for the health of the business because it does not have to depend on a few common sources that may or may not be able to deliver when they need to be able to.

Contract Management

One of the biggest headaches that can derive from a source-to-pay strategy is the management of the contracts. Although many of the sources can be a breeze to stay on top of, not all of them are created equally.

One of the biggest problems that companies can run into with their sources is that they strike a deal for a certain scenario. For instance, if the vendor agrees that you will do business for a certain price of a certain item if you buy a certain amount of that item you will get a discount. 

If the vendor that you are speaking to does not let the rest of the company know what the agreement is, you might very well pay full price for whatever it is that you agreed upon when it comes time to pay.

Contract management has to keep an eye on:

  • Agreed prices
  • Contract expiration
  • Agreed availability of goods or services

One of the best ways for a company to save money and get the most out of their spending is to make sure that they are always getting the best prices they can for the things they are buying. When a company makes a deal to purchase 1,000 items or so for a certain price which is a dollar less for each item, they could end up paying $1,000 over budget if they do not get the prices that were agreed upon.

In most cases, all it takes is a phone call or an email to the vendor to make them aware of the mistake, but many issues like this go undetected and neither party is aware. When this happens the company is silently leaking money away into the abyss when it could be keeping it and putting it to better use.

One of the most practical reasons that business owners implement Coupa software is that they want to keep track of every penny that goes in and out of the company, and have a bird’s eye glimpse of where money is flowing from and to.

With the kind of software in place that is capable of contract management, many business owners find that the headaches of managing contracts go away because the software can handle a large amount of work, and keep it all very precise.


The way that the source-to-pay process works can vary from company to company. There is no one set method for successfully implementing a perfect process. Where one company may need a type of good, another will need a type of service. However, the basics of it all are the same throughout all businesses. Save as much money as possible while bringing in even more money.