What is source-to-pay?

Source-to-pay (S2P) is the complete lifecycle of the procurement process that integrates the strategic sourcing activities (needs identification, market research, and supplier evaluation and selection) with the transactional procure-to-pay process (requisition, purchase order, invoicing, payment).

It is an end-to-end business process that includes all the steps from spend analysis and engaging with potential suppliers to three-way matching and payment for the purchase of goods and services. Sometimes, it could even cover invoice financing.

Its scope and strategic depth make it different from the procure-to-pay (P2P) process. If we were to look closely, we’d find that P2P is a part of the source-to-pay process but extends upstream to include strategic sourcing elements.

In a nutshell, procure-to-pay is all about “purchasing and payment,” while source-and-pay focuses on “find, negotiate, buy, and pay.” These two concepts mirror another well-known relationship: procurement vs. purchasing.