Controlling spend starts before the invoice is issued

Many organizations have extensively digitized their invoice processing in recent years. Invoices are received electronically, data is automatically recognized, workflows route invoices to the appropriate approvers, and payment files are generated from the ERP system. Yet a significant portion of the work in Accounts Payable remains manual.

The cause often lies not in the invoice processing itself, but rather in the process.

A supplier’s invoice can be recognized perfectly from a technical standpoint. But if it is not known who made the purchase, what it was for, what budget was available for it, what price was agreed upon, and who authorized the expenditure, the Finance department must still reconstruct that context.

This is particularly true for indirect expenses. This includes not only office supplies or IT hardware, but also marketing services, software, external consultants, facility services, training, maintenance, telecommunications, and countless other products and services that employees purchase from various parts of the organization.

The result is a fundamental discrepancy between the moment a financial obligation arises and the moment Finance becomes aware of it.

Procurement automation aims to bridge that gap. Not by having every order processed through a central procurement department, but by providing employees with controlled digital pathways through which they can make purchases themselves. This allows an organization to bring more of its spending under control before the invoice arrives.

This is not just a procurement issue. For Finance and Accounts Payable in particular, the quality of the procurement process determines how much of the subsequent invoice processing can actually be automated.

From Invoice Verification to Spend Control

The traditional purchase-to-pay process seems straightforward: an employee submits a request, the request is approved, a purchase order is generated, the supplier delivers the goods, and then sends an invoice.

In reality, a large portion of indirect spend doesn’t start that way.

A marketing manager hires an agency. An employee subscribes to a cloud application. Operations orders supplies from a trusted supplier. HR books a training session. A branch manager asks a local service provider to perform a repair.

Only then does the transaction appear in Finance, often in the form of an invoice.

At that point, Accounts Payable can no longer prevent or adjust the purchase. The supplier has delivered the goods, and the organization has typically already incurred a liability. An approval workflow for the invoice is therefore primarily a post-facto check.

That is an important distinction. Invoice approval is not the same as purchase approval.

Procurement automation therefore shifts part of the control to an earlier stage. The purchase request or proposed purchase becomes the first formal step in the process. At that point, it can be determined whether a supplier is authorized, whether a contract exists, whether budget is available, which financial code applies, and who must give approval.

This creates what is often referred to in procurement as “spend under management ”: expenditures that do not simply occur, but instead follow agreed-upon suppliers, processes, contracts, and controls.

That difference is measurable. In 2024, The Hackett Group reported that so-called “Digital World Class” procurement organizations manage or influence 21% more spend than comparable organizations and, at the same time, experience 59% less maverick buying. According to the same study, their process costs per order are 76% lower. [1]

That does not mean every company should aim for a single percentage of spend under management. What makes sense varies by sector and type of expenditure. The principle is more relevant: the sooner an expenditure enters a structured process, the more opportunities there are to automatically control and process it.

This also changes the perspective for Finance. The question is no longer: How do we process an incoming invoice as quickly as possible? But rather: How do we ensure that Finance is already aware of the transaction before the invoice arrives?

One entry point for procurement, multiple routes to a supplier

Greater control does not automatically mean that the procurement department has to handle every purchase itself.

For many organizations, that would actually be unworkable. The business units often have the subject matter expertise to determine what is needed. Marketing chooses a specialized agency, IT selects specific technology, and Operations knows which materials or services are required.

Decentralized responsibility can therefore certainly continue to exist.

The challenge is to centralize the entry point to the procurement process, not necessarily the purchasing decision itself.

Modern e-procurement solutions are therefore increasingly based on the principle of guided buying: an employee starts from a single digital environment and is guided to the appropriate path depending on the purchase. SAP, for example, describes guided buying as a central environment in which employees can request products and services, while procurement policies and process rules are applied during the request process. [2]

Which path is followed depends on what someone is trying to purchase.

For frequently used standard products, an e-catalog makes sense. The organization makes products or services from contracted suppliers available there under agreed-upon terms. The user selects what is needed, much like in an online store, but the order takes place within the controlled procurement process.

A punchout catalog goes a step further. The employee opens the supplier’s online store from within the procurement environment. As a result, the product range, prices, and availability are maintained by the supplier. The selected shopping cart is then sent back to the company’s own procurement system, where budget checks, approval, and order creation take place.

For less standardized expenditures, however, a catalog simply does not work. A creative agency, legal advice, or a temporary consultant cannot easily be listed in a catalog as a product with an item number. In such cases, a dynamic request form can be used.

Depending on the category, the system can request different information. For software, this might include the contract term, number of users, and contract value. For professional services, a quote, project code, time period, and the person in charge may be requested.

Marketplaces, framework agreements, limit orders, contract-based requests, and purchase cards can also be part of the same architecture.

The goal, therefore, is not to enforce a single universal ordering method. The goal is to create a single, controlled entry point behind which various procurement routes are available.

That is essential for adoption. A process designed solely from the perspective of procurement or Finance invites users to work around it. An employee who has to fill out twenty fields they don’t understand in order to make a purchase will eventually just send an email to the supplier anyway.

Good procurement automation therefore doesn’t just try to enforce compliance, but—above all—makes the right route easier than the wrong one.

This partly explains why digitally mature procurement organizations are strongly committed to self-service. The Hackett Group found that top-performing organizations conduct significantly more indirect transactions through electronic catalogs and process many more requests and orders electronically. [3]

Control at the moment it still matters

A centralized intake process creates value primarily because controls can be performed before the organization enters into a commitment.

Take budget control, for example.

In a traditional process, a budget is often compared to actual costs that have been recorded. But if a department still has a budget of €100,000 and, in the meantime, already has €80,000 in approved orders pending for which no invoice has yet been received, the accounting records alone provide an incomplete picture.

A digital procurement process can track not only actuals but also commitments.

When an employee then submits a request for €30,000, the system can immediately determine that the remaining available budget is insufficient. Depending on the policy, the request may be blocked, a warning may appear, or additional approval may be required.

The same applies to other controls.

For example, a workflow can automatically determine that a manager may approve amounts up to €5,000, a budget holder up to €25,000, and that a member of executive management must be involved for amounts above that. For certain categories, IT, Legal, Security, or Procurement can also be added to the workflow.

Rules can also specify that an existing preferred supplier must be used, that multiple quotes are required above a certain amount, or that onboarding and compliance checks must be completed before a new supplier can be approved.

The technology does not have to process every request in the same way.

An order of €80 from an approved catalog, within budget, and from a contracted supplier can be processed almost entirely automatically. A consulting engagement of €150,000, however, will likely require human review.

That is precisely what automation is: not eliminating every step, but making routine decisions automatically and involving people only where their judgment is truly needed.

This also creates a clearer separation between policy and execution. Employees do not need to know by heart which authorization rules, budget limits, or supplier agreements apply. The system can apply these rules as they submit their request.

APQC therefore explicitly includes the percentage of electronically approved purchase orders, the use of e-procurement catalogs, and the proportion of maverick buying among the metrics for the efficiency of procurement processes. [4]

Control thus becomes part of the transaction itself rather than a post-transaction audit.

Procurement automation is more than just a procurement system

Procurement automation is sometimes equated with the implementation of a Source-to-Pay or Purchase-to-Pay platform. While such a platform often serves as the foundation, the technological architecture extends beyond it.

On the front end are e-procurement, guided buying, and intake. This is where requests are recorded and users are guided to the correct procurement route.

Behind the scenes are workflows and business rules. Among other things, they determine what approvals are required, which budget must be checked, and which supplier, category, or general ledger code applies.

ERP and financial systems remain important for financial recording, budgets, commitments, journal entries, and payments. Integrations ensure that an approved request, for example, can automatically create a purchase requisition or purchase order in the ERP system.

Spend analytics then consolidates data from orders, invoices, contracts, and supplier files. This reveals where the same products are purchased from different suppliers, where fragmentation occurs, and what portion of spending falls outside of contracts or processes.

Procurement orchestration is also receiving increasing attention. In this context, a single suite does not necessarily cover the entire process. An orchestration layer connects various systems and determines, based on the request, which systems, stakeholders, and controls are needed. This is particularly relevant for organizations with multiple ERP systems, specialized applications, or varying processes across business units.

Furthermore, automation does not always have to take place via APIs or native integrations. RPA can still play a role when older systems do not offer modern interfaces. For example, a robot can transfer data between applications or perform repetitive administrative tasks.

Added to this is artificial intelligence (AI).

The current generation of AI can, among other things, interpret free-form text from requests, suggest a category, analyze contracts, summarize supplier information, flag missing information, or guide employees through a conversation to the correct purchasing process.

This explains why procurement technology is currently receiving so much attention. In Deloitte’s Global CPO Survey 2025, based on responses from more than 250 CPOs across 40 countries, cost reduction, operational efficiency, and digital transformation/GenAI were all among the top priorities. According to the survey, procurement organizations now spend approximately 20% of their budget on procurement technology—nearly twice as much as in the 2023 survey. [5]

But AI does not automatically turn a poor process into a good one.

Classifying an open-ended request via email using AI can save time. It is usually more effective to ensure that the request follows the correct digital path from the start.

That distinction is important. Task-level automation reduces the number of steps required. Process automation eliminates the need for those steps altogether.

The Hackett Group also makes that distinction in its latest research on AI in procurement. The organization states that the greatest potential gains arise when the entire Source-to-Pay process is redesigned with AI as an enabler, rather than automating existing actions one by one. The accompanying 2026 model forecasts, among other things, significantly higher adoption of guided buying and catalogs, as well as a decline in maverick spend. [6]

The technology is thus shifting from process automation to process orchestration: determining which route a transaction should follow and automating as many steps as possible.

Why this is particularly relevant for Accounts Payable

For AP, the impact becomes apparent as soon as the invoice arrives.

If an invoice isn’t linked to a prior transaction, a search begins. Who ordered this? For what purpose? Which cost center? Is the amount correct? Is there a contract? Who needs to approve it?

Automatic invoice recognition can extract the supplier, amounts, VAT, and invoice lines. But that technology can’t always determine why the organization made the purchase.

In the case of a pre-approved purchase, most of that information is already available.

The supplier is known. The order or financial commitment has been recorded. The budget holder has given approval. The cost center or project code may already be linked to the request. Prices and terms are known.

As a result, the invoice can be linked to an existing transaction upon receipt.

For physical goods, this can result in classic three-way matching between the purchase order, goods receipt, and invoice. For other categories, a two-way match or verification against a contract, blanket order, or other predefined commitment may suffice.

Therefore, not every invoice necessarily needs to follow the same PO structure. For some services, that would merely create a superficial administrative check. What matters is that the organization records sufficient context before the invoice is received so that it can be automatically verified later.

The relationship between procurement and accounts payable is clearly reflected in benchmarks. In APQC’s cross-industry dataset, the median shows that 85% of supplier invoices can be linked to a purchase order. When measured by invoice lines, the median is 88%. [7]

That percentage is not a goal in and of itself. An organization that provides many project-based services will have a different profile than a manufacturing company. It does, however, demonstrate how closely the data from the procurement process and AP automation are interconnected.

The better the upstream process, the less interpretation is needed downstream.

For Accounts Payable, this means, in concrete terms, less manual coding, fewer searches for order placers, fewer reminder emails to approvers, and fewer corrections after the fact. Employees can focus on exceptions: unusual prices, duplicate invoices, missing receipts, unknown suppliers, or other transactions that truly require attention.

This can also reduce processing time. After all, AP no longer has to restart an approval process for every invoice—a process that was actually intended to approve the original purchase.

This also changes the meaning of touchless processing. Processing an invoice without human intervention is not just a matter of better OCR, e-invoicing, or AI. It is primarily the result of a workflow in which sufficient information has been recorded in a structured format in advance.

From Purchase-to-Pay to Control Over All Expenses

The interesting development in procurement automation is therefore not a single specific technology.

It is the shift from automating individual transactions to organizing the entire way an organization spends money.

This is relevant because indirect spend is inherently fragmented. Decisions are made by Marketing, IT, HR, Operations, Facility Management, and virtually every other department. McKinsey previously noted that in some sectors, indirect spend can amount to 10%, 15%, or even 18% of revenue, while that spending is often not fully managed by a single function or owner. [8]

Full centralization of all those decisions is usually not desirable.

Nor is full decentralization of the process.

The middle ground is a model in which the business can continue to make its own purchases, but in which the channel, the data, and the financial controls are organized centrally.

An employee then does not need to know what procurement technology is behind their request. They search for a product, open a supplier catalog, or describe what is needed. The system then determines which supplier is available, what information is needed, whether a contract exists, what the budget allows, and what approval is required.

For a simple, compliant purchase, the process can generate an order almost immediately. For a complex purchase, the procurement department, Legal, or another specialist is consulted.

Meanwhile, Finance gains a much more complete picture of future expenditures.

Not only what has already been recorded, but also what has been requested, approved, ordered, and contracted. This improves budget monitoring and makes financial obligations visible sooner. It also helps with accruals and cash flow planning: future expenses aren’t only visible once the supplier sends an invoice.

This gives the business freedom within controlled parameters. Procurement can shift its focus from managing simple orders to suppliers, categories, and negotiations where real value can be added. And Accounts Payable receives fewer and fewer invoices that require an initial investigation into what preceded them.

The latter is perhaps the most important connection between procurement automation and Finance.

After all, AP automation doesn’t begin when an invoice arrives.

By that point, the conditions for automation have already been largely determined.

An invoice from a known supplier, based on a verified request, an approved budget, and a documented commitment, can move automatically through the process as long as everything is in order. An invoice that serves as the first record of a purchase almost always requires more human interpretation.

For organizations looking to take the next step in Purchase-to-Pay, the greatest opportunity therefore does not necessarily lie in processing invoices even faster.

The bigger step is ensuring that an ever-larger portion of expenditures is under control even before the invoice is issued.

Sources and References

1. The Hackett Group, “Long-Term Investment in Procurement Technology Lays the Foundation for Gen AI Adoption”, September 2024. Benchmark study on Digital World Class procurement, spend under management, maverick buying, and transaction costs. thehackettgroup.com
2. SAP, “Guided Buying for Central P with SAP Ariba Buying” and SAP Learning, “Focusing on Requisitions”. Description of guided buying, purchase requisitions, catalogs, policy guidance, and integrated approval processes. help.sap.com
3. The Hackett Group, “Digital World-Class Procurement: Latest Benchmark Metrics and Key Findings”, 2024, and “What’s the Digital World-Class Procurement Advantage?”, 2023. Benchmark data on self-service, electronic catalogs, requisitions, and purchase orders. thehackettgroup.com
4. APQC, How Do You Benchmark Procurement? and What Are the Key Steps Involved in the Purchasing Process?, 2025–2026. Procurement benchmarking on electronic approvals, e-procurement, maverick buying, and process performance. apqc.org
5. Deloitte, 2025 Global Chief Procurement Officer Survey – Agents of Change: Procurement’s Big Bet on Digital, 2025. Survey of more than 250 CPOs in 40 countries on priorities, technology investments, and AI. deloitte.com
6. The Hackett Group, AI World Class Procurement Benchmarks, July 2026. Benchmark model for AI-driven redesign of sourcing, purchasing, and Purchase-to-Pay. thehackettgroup.com
7. APQC Open Standards Benchmarking, “Percentage of supplier invoices matched with the purchase order” and “Percentage of invoice line items matched with a purchase order”. Cross-industry benchmarks for Accounts Payable. apqc.org
8. McKinsey & Company, Indirect Procurement: Insource? Outsource? Or Both?, November 2020. Analysis of the scope, fragmentation, and management challenges surrounding indirect procurement. mckinsey.com