Procure to Pay Process or P2P Cycle

Procure to Pay Process

• ERP application has simplified the Business Processes. In Big Companies, we have separate Team for different Business function like Accounts Payable Team, Account Receivable Team, General Accounting Team, Banking Team, Taxation Team, Finalization Team etc.

• ERP made easy to understand the Business processes and now we have clarity on the Business process and its execution. Here we going to be discuss on Procure to Pay Process

Procure to Pay is a process related to purchase which is part of Accounts Payable. P2P process has following steps or process flow as under

 Purchase requisition (whenever there is any requirement of Material or Services)
 Quotation
 Vendor Selection
 Issue Purchase Order
 Goods Receipt
 Invoice Processing
 Vendor Payment
 Vendor Evaluation & Report to Management

 Purchase Requisition

User department raise a Purchase requisition to Purchase Department for Purchase the Material or service as per the requirement.

Request for Quotation

Purchase Department request for Quotation from Different Vendors, Ideally It should be minimum 3, its also help accounting team at the time of Audit.

 Selection of Vendor

Now after receipt of Quotation, Relevant Department like Purchase, User and Finance Department will Select a Vendor on the Basis of Quality, Price, Vendor Relation, Vendor History etc

Issue Purchase Order

After selection of Vendor, Purchase Department will issue a Purchase Order to Selected Vendor

Goods Receipt

We receive Goods at Factory, Plant etc and will create a Goods Receipt Note that’s called GRN.

Invoice Processing

Finance Department verify the Invoice as per the PO’s Terms checks all the relevant supporting documents like Quality report, Guarantee card, Invoice, Challan etc then process/ post Invoice.

Vendor Payment

As per the Payment terms mentioned in PO department will release the payment to vendor on due date.

Evaluation of Vendor and Report to Management

As per the scheduled time we will evaluate the Vendors and Report to Management. This process will help us in many ways like to decide we should have continue with Vendor for future dealings or not.

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