What does Source-to-Pay Mean?

What does Source-to-Pay Mean?

There seem to be new terms emerging constantly when referring to software. Source to Pay (also known as S2P) is one of those terms. Although it is a simple and straightforward term, it describes a very important process that all enterprises could benefit from understanding. So, what does source-to-pay mean?

From Source to Pay

Source-to-pay is more of a process than a term. Just like the whole procedure of procurement is made up of several stages in the process of finding and purchasing goods, the source-to-pay process has the same components. In fact, the source-to-pay process is becoming the new, and better way to procure. In the simplest terms, source-to-pay is the journey between obtaining the source of the goods and paying for them after all of the steps have been completed. The great thing about modern-day S2P solutions is that highly intelligent software can actually play a huge role in the task of simplifying the whole process.


The first thing that needs to be done in the process of source-to-pay is to plan. Take a close look at what the needs of the organization are and plan the steps that will take place in order to fulfill them. This can be a team meeting, a written out document, or even as complex as developing a formal procurement plan. Many establishments are hiring S2P consulting firms to help with the meticulous process of planning.

Strategic Sourcing

Modern-day technology has taken much of the tedious searching out of the sourcing process. Imagine running a scan to find the best suitable option for your establishment based on cost, quality, success rate, and the highest probable return on investment. Having a great S2P strategy in place can cut more than half of the manual work out of the entire procurement process, as well as create more competition for vendors by easily gathering multiple in one sourcing event.

Finding the Source

Each business will ultimately have its own characteristics based on the needs and demands of the company. The one thing that all businesses that seek S2P have in common is that they are looking for a supplier that is reasonably priced, and dependable. If your business already has a great supplier in place that it depends on, what happens if that supplier suddenly goes out of business for some reason? If you have an S2P consultant in place, you can easily maneuver from one great supplier to the next. If you are on your own you will have to go through the whole searching for a new vendor phase again.

Ordering Goods and Services

Once all of the sources have been located and established, the next step in the process would be to order the items that you will procure. In many cases, a business will already have some sort of system in place that works for them. Getting the correct items ordered and ready for the next step can be a grueling process depending on the complexity of the order. If you are ordering 12,000 pencil sharpeners, 1,200 erasers, and 2,000 dozen boxes of pencils from one vendor and 100 different types of binder paper from another it can be a bit tricky to keep tabs on each item. It’s a good thing that technology can help with things like that, as well as ensuring that the price paid is the same as the price negotiated. After all, you’re missing out on a good amount of savings if you pay more than the amount that was negotiated.

Finalizing the Transaction

Each organization will have its own procurement fingerprint. One company might, as we mentioned above, deal mainly with writing utensils and paper. Another one might deal with roofing contractor materials. Whatever the goods are, they need to be acquired and paid for in order for the process to become finalized. Being able to keep all of the transactions centralized and organized is a crucial factor in a successful source-to-pay process. There are many ways that a business can go about the whole procurement process, but in the end, it is important to find the most efficient, economic solution that is available. A dollar here, an hour there all add up at the end of the day. The concept of a strategic source-to-pay solution is to get the absolute most out of an investment that you possibly can.