Procure to Pay (P2P)

Procure to Pay (P2P) is the end-to-end set of business functions used to obtain goods and services through procurement. It runs from defining and executing the requirement, through contract award and management, receipt and acceptance, entitlement, payment or disbursement, and contract closeout. The U.S. Department of Defense uses the term in exactly this way on its Procure-to-Pay programme page.

P2P is a business-process and systems term, not a procurement method and not a type of competitive solicitation. It connects procurement, contracting, receiving, invoice approval, accounting, and payment functions so that data moves between them. In Canada, Shared Services Canada (SSC) uses a Procure-to-Pay solution to manage procurement and payment processes electronically.

What the Procure to Pay process covers

In ordinary purchasing terminology, P2P covers the path from requisition and purchase order through receipt of goods or services, invoice processing, supplier payment, and recording the transaction in financial accounts. The United Kingdom's tax authority describes the process in these terms in its procure to pay guidance.

Governments and defence organizations use P2P systems to support a common set of activities:

• electronic requisitions and purchase orders;
• funds certification and recording of obligations;
• contract-award and contract-management data;
• electronic receiving reports and acceptance;
• invoice or payment-claim processing;
• supplier payment and financial reporting; and
• contract completion and closeout.

The nine handshakes in the U.S. Department of Defense model

The U.S. Department of Defense organizes P2P around “handshakes”, which are data exchanges between procurement, accounting, and entitlement systems. Its P2P handshakes capability summary identifies nine critical exchanges. They include purchase-request creation, funds validation, recording obligations, receipt and acceptance, entitlement, vendor payment, payment reporting, and contract-completion statements.

The same summary describes the process as beginning with a defined requirement and continuing through contracting to vendor payment. The model shows that P2P is a chain of linked records. A purchase request, an obligation, a receiving report, and a payment each depend on the data created in the step before.

How Shared Services Canada uses Procure-to-Pay

SSC states that its Procure-to-Pay solution manages procurement and payment processes electronically. The system is intended to standardize and streamline how SSC buys goods and services, pays suppliers, and interacts with vendors. The details are on the SSC procurement business system page.

An earlier SSC presentation to industry describes a P2P initiative to modernize and standardize procurement and payment processes, including a P2P web portal. It treats P2P as an electronic way of managing procurement-to-payment activities, not as a separate kind of solicitation.

P2P in defence contracting

The U.S. Department of Defense model is a useful allied-defence example because it includes vendor-facing stages. Its procedures provide for contractors to submit claims for payment and receiving reports through Wide Area WorkFlow, an electronic system, as set out in the Department of Defense procedure document. In defence contracts, P2P terminology can therefore appear as requirements for electronic receiving reports, invoices, payment claims, or data exchange.

No single organization-wide Canadian contract clause titled “Procure to Pay” has been established for NATO or the Canadian Department of National Defence, so suppliers should not assume one exists.

What P2P means for a supplier bidding on Canadian public contracts

P2P describes the buyer's end-to-end process. It does not prescribe one universal Canadian supplier workflow. Where a Canadian buyer names a P2P system or process in its documentation, follow the specific solicitation or contract instructions for electronic ordering, delivery or receiving documentation, invoices, payment claims, required identifiers, and submission channels.

For SSC contracts, review how the department's electronic system handles ordering, invoicing, and payment before delivery begins. Build those steps into your delivery and billing plan so that receiving documents and invoices reach the buyer in the form it requires.