Source to pay – Definition, Procurement process, difference P2P

It has never been so easy for companies, especially SMEs, to optimize processes, thanks to the arrival of a new generation of software that allows teams of any size to take control of the solution without any technical skills and without writing a line of code. These “no-code” software also feature intuitive interfaces and integrated automations that free employees from non-value-added tasks and facilitate their work. Source to pay software makes it easy to request, approve, order and control purchases.

Gone are the days of repetitive, non-centralized purchase requisitions, endless information searches, lengthy approvals and errors. Companies gain control, save time and cut costs, while strengthening collaboration between the various players.

Many organizations, as well as SMEs looking to structure and modernize, are taking a keen interest in the digitization and automation of Source to Pay. But what is Source to Pay? Which steps make up this Procurement process? What are its benefits, and how can we ensure successful implementation?

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What is Source to Pay (S2P)?

Definition of Source to Pay (S2P)

Source to Pay, or S2P, is a Procurement process that covers all stages from identification of the need and search for vendors (sourcing/call for tender) to receipt of the order and actual payment of invoices. It therefore encompasses both the Source or Tender part (finding, selecting and negotiating with the supplier) and the Pay part (placing the order, managing deliveries, receiving the invoice, reconciling and initiating payment).

Source to Pay then includes vendor selection, evaluation and contractualization in the Procurement process, giving it a more strategic and not just operational scope.

The difference between Source to Pay and other processes such as Procure-to-Pay

In a Procure-to-Pay (P2P) approach, the cycle begins where the supplier is already pre-selected and has already proposed a quotation, then focuses on approval of this quotation, management of the purchase order cycle and ends with receipt of the invoice and payment. We don’t particularly dwell on when or how the vendor is chosen, or how the contract is drawn up.

In this way, Source to Pay goes further upstream, integrating supplier research, sourcing, tendering, negotiation and signing of the contract or framework agreement.

Steps in the Source to Pay process

To understand how to optimize a Source to Pay process, it’s important to detail each of its stages. Although each company may have its own specific requirements, the following breakdown is generally applicable:

1. Identifying needs and framing the Procurement
2. Sourcing, tendering and selecting vendor
3. Negotiation and contractualization
4. Order placement and delivery management
5. Invoice reconciliation and validation
6. Supplier payment
7. Vendor evaluation and continuous improvement

Step 1 – Identifying needs and scoping the Procurement

The first phase consists in clearly understanding the company’s internal needs: what products or services do we need to acquire? In what quantities? With what precise specifications? In addition, budgetary objectives need to be set, and Procurement needs to be framed (priority to local suppliers, CSR objectives, volume policy, etc.).

At this stage, we take into account :

• Needs expressed by internal departments (production, R&D, marketing, etc.).
• Budgetary and financial constraints.
• Quality, lead time and innovation criteria.

This stage can also include an approval circuit involving various internal stakeholders, according to different criteria: estimated Procurement amount, urgency, department concerned, etc.

Step 2 – Sourcing, tendering and selecting vendors

Once requirements have been clarified and approved, we enter the sourcing phase, i.e. the search for potential suppliers. This stage includes :

• Market research and identification of relevant vendors.
• The call for tenders includes the request for information (RFI) and the request for proposals (RFP).
• Assessing the reliability, quality and competitiveness of each supplier.

Stage 3 – Negotiation and contractualization

Once the vendors have been shortlisted, we move on to negotiating terms and conditions. This includes :

• Prizes and discounts.
• Delivery terms and deadlines.
• Clauses relating to quality, penalties for delays or non-compliance, etc.

This stage culminates in the signing of a contract or framework agreement, which will form the legal and operational basis for future orders.

Step 4 – Order placement and delivery management

Once the contract has been signed, we move on to the more operational phase, sometimes called Procure. This stage includes :

• Issue the purchase order (PO) from the ERP or Procurement software and send it to the supplier
• Delivery tracking: meeting deadlines, tracking carriers, checking conformity on arrival (quantity, quality, etc.).

When the delivery is received, a quality check is carried out and the receipt is recorded in the system. In a digitalized Source to Pay approach, all these actions are automatically traced, and information (quantity, reference, date) is reconciled in real time. Alerts can be set up in the event of delays or non-compliance.

Step 5 – Invoice reconciliation and validation

This phase concerns the various invoices issued by the vendor according to payment terms. To secure the transaction, the purchase order is reconciled with the order received.

The aim is to check that the amounts, quantities and prices correspond to those negotiated and validated. In the event of discrepancies, additional validation workflows are triggered, and a credit note can be requested from the supplier, or the invoice adjusted.

Step 6 – Vendor payment

Once the invoice has been validated, the finance or accounting department initiates payment. According to the conditions set out in the contract:

• Immediate payment or payment on due date (30, 45, 60 days…).
• Payment broken down into several instalments (e.g. percentage on order, percentage on delivery).

Payment automation can be connected to the bank or to an electronic payment system. Accounts payable and accounting are updated in this way. In a digitized Source to Pay flow, this step is greatly facilitated by real-time reconciliation and visibility. The risks of data entry errors and payment delays are also reduced.

Step 7 – Analysis and continuous improvement

Finally, the last phase of Source to Pay is data analysis and the search for continuous improvement. This includes:

• Evaluation of supplier performance (lead times, quality, responsiveness).
• Profitability analysis (comparison of prices obtained vs. budget).
• Monitoring compliance with legal, social and environmental standards.

Thanks to key performance indicators (KPIs), the company can identify bottlenecks, negotiate better rates for future contracts or reassess the suitability of certain vendors.

The benefits of an efficient Source to Pay (S2P) Procurement process

Implementing a digitalized Source to Pay process like Lapala

Why digitize and automate your Source to Pay?

As mentioned above, the main benefit of digitization (moving from paper, Excel and scattered emails to centralized Procurement software like Lapala) is to streamline the chain, reduce errors and make data more reliable. Some benefits:

• Fewer manual entries and errors: the tool manages data flows, automatically reconciles orders and invoices, etc.
• Real-time tracking: everyone can see the status of quotes, orders, invoices and any blockages.
• Automatic compliance with internal rules: certain validations are only triggered if the amount exceeds a certain threshold, or if the vendor is new, etc.
• Precise budget control: actual vs. budget can be compared at any time.
• Decision support: by combining financial and operational data, we can better analyze the profitability of each Procurement category.

How to choose the right Procurement software

Today, there are a variety of solutions for automating the Source to Pay process. The choice depends on several criteria:

• Company size: SMEs may be looking for a simple, modular solution, while larger companies opt for more complex, integrated solutions.
• Budget and billing model: user license, transaction subscription, implementation and integration costs. It’s all possible!
• Target features: management of purchase requisitions, catalogs, calls for tender, purchase order generation, invoice/order reconciliation, etc.
• Interoperability with your software: native connectors or APIs to link the platform to ERP, CRM or accounting software. Make sure you can connect your existing software.
• Ergonomics and no-code: ease of use is crucial to adoption. Lapala, for example, offers an intuitive interface, reducing the need for technical training. This will have a major impact on change management.

You will need to contact each software to collect this information.

Connect your company’s other software (ERP, accounting, CRM, etc.)

Having a Source to Pay process connected to your software means huge time savings in tool synchronization and frees your teams from non-value-added tasks.

• ERP: for inventory management, cost accounting and planning (production, procurement).
• CRM: even if it’s more customer-focused, it can be useful for certain specific purchases linked to a customer project.
• Invoicing and accounting software: to generate invoices and track payments.
• Other: HRIS, electronic signature solutions, document archiving, etc.

Examples of Source to Pay software features

Numerous software solutions are helping to digitize Source to Pay. Among them, Lapala stands out for its ease of use and no-code customization. In other words, without writing any code, you can tailor-make a Source to Pay process:

• Purchase requisition forms: adapted to each type of purchase or service.
• Conditional approval circuit: if amount > $10,000, validation by management; if purchase linked to a call for tenders, validation by Procurement department…
• Automation: information enrichment, updating of existing software, document filing, automated notification and e-mailing.
• Purchase order lifecycle management: Lapala sends the purchase order (PO) and stores it in the ERP or Drive, while informing the vendor. It then tracks receipt of the order.
• Order-receipt-invoice reconciliation: by connecting Lapala with the accounting system or ERP, we ensure automatic matching. In the event of discrepancies, payment is blocked and the supplier is alerted.
• Dashboards and real-time reporting: the finance team tracks expenditure, identifies late deliveries, monitors budget consumption…

Find the complete comparison of Procurement software by reading this article: the 9 best Procurement solutions for 2025

Key success factors for a high-performance Source to Pay process

Involvement of management and business teams

Transforming a Source to Pay Procurement process requires the commitment of everyone involved. Management must support the process, as there may be reluctance to change. Procurement, finance and logistics teams also need to coordinate and share their expectations, to ensure that the solution adopted meets their real needs.

Clarification of processes and responsibilities

Even before implementing software, it’s important to ensure that the Procurement process (S2P) is clearly defined. Who issues the request? Who validates it? How are negotiations conducted? Who has authority over the final choice of vendor? Formalizing a RACI (Responsible, Accountable, Consulted, Informed) can help.

Integration with existing systems (ERP, CRM, etc.)

Source to Pay involves critical data such as supplier lists, budgets, orders, invoices, etc. It must therefore be interconnected with other systems (ERP, Accounting, CRM) to avoid multiple re-entries or information silos. Check that your Source to Pay solution has APIs or connectors to facilitate these exchanges.

Training and change management

New software or new processes can destabilize employees. So it’s important to plan ahead:

• Simple, ideally short, tailor-made training courses. Thanks to their ergonomic design, many software programs, such as Lapala, require no training at all.
• Documentation and even tutorials.
• Initial support to get users up and running quickly.

Performance measurement and continuous improvement

Source to Pay is not static; it needs to evolve constantly. Define KPIs (validation times, percentage of invoice/purchase order variance, vendor satisfaction rate, etc.) and monitor them regularly. If necessary, adjust rules and settings, or identify new improvement projects (e.g. paperless invoicing, even more refined inventory management, supplier risk analysis, etc.).

Find all the best practices for procurement management by reading this article: 11 Procurement Best Practices in 2025.

Conclusion – Source to Pay, a strategic digitalization strategy for companies

Source to Pay is more than just a Procurement process. It’s a strategic lever that creates value at every stage, from vendor selection to payment. By adopting an S2P approach, companies gain visibility, operational efficiency and financial control. It strengthens collaboration between internal and external teams, reduces the risk of error or fraud, and becomes more agile in the face of an uncertain economic environment.

Today, the digitalization of S2P has become almost unavoidable. Modern tools like Lapala provide the flexibility needed to :

• Automate repetitive, low-value-added tasks.
• Ensure traceability and regulatory compliance.
• Easily connect ERP, CRM, accounting or HRIS software.
• Set up workflows and approval circuits according to internal rules.
• Analyze Procurement performance in real time.