To support JMP on our journey of separating from SAS, the JMP Finance team uses the "Financial Literacy 101" series to explain basic financial topics and lingo in a way that is easy to understand and beneficial to all.
What is P2P?
Procure to Pay (P2P) is the process of acquiring and paying for goods and services (i.e., everything from Procurement to Payment). This involves requisitioning, negotiating, purchasing, receiving, invoicing, and paying for products and services.
NOTE: SAS is still handling P2P functions for JMP until otherwise noted. The company signing the contract is the company responsible for executing the P2P process and making payment.
What is the purpose?
Overall, the purpose is to streamline procurement, control costs, and improve vendor management. Believe it or not, the purpose is not to hinder progress. While it may seem that going through this process is like falling into quicksand, it is intended to add value along the way. As a requestor, you likely don’t know what price is fair or how to push back on the vendor to get what you really need. This is where Procurement brings their expertise. Do you know the terms and conditions necessary to minimize risk for JMP and ensure that you get everything you paid for if a vendor breaches the contract? For this and much more, we rely on Legal. Are budgets, accounting, and managing cash flow what keep you up at night? I sincerely hope not, but you can rest easy because Finance has got you covered. More specifics on P2P will be shared in next month’s Finance 101 blog.
Seriously, what is the benefit?
The primary benefit is having alignment between the business, Legal, Procurement, and Finance. If a vendor delivers goods or provides services without going through the necessary P2P steps, the business might be responsible for paying the invoice even if the vendor failed to meet expectations or charged an unfair price. A streamlined process provides transparency, consistency, and competitive pricing for the business. It also helps ensure there is money to cover expenses and that all requests can be prioritized appropriately.
Why does it matter to JMP Staff?
P2P will assist requestors in getting what they need and increase the likelihood of competitive pricing which allows us to get more out of the budget. For non-quota carrying employees, P2P directly impacts EBITDA which must meet annual targets to achieve or maximize a bonus payout. See this article for a refresher on what EBITDA means.
Why does it matter to JMP?
If everyone had a credit card to use at will, there would be virtually no way to control spending which could result in more cash outflows than inflows. This puts the employees and continuing operations at risk. Using a streamlined process like P2P supports business success and growth.
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