PROCURE TO PAY

Procure to Pay
1. DETERMINATION
OF
REQUIREMENTS
9. PAYMENT

8. INVOICE
VERIFICATION

Procurement 2. SOURCE DETERMINATION

6. GOODS

RECEIPT

5. ORDER 3. VENDOR SELECTION

MONITORING 4. PO
PROCESSING
 Accounts Payable
 Originates from the Purchase-to-Pay Cycle
Purchase Req Based on specific request or MRP
run

Purchase Order Released to suppliers

Dr. Inventory/Asset XX
Goods Receipt Cr. GR-IR Clearing XX
Account

Invoice Dr. GRIR Clearing Account XX

Verification Cr. Accounts Payable- XX
Vendor

Accounts Payment Run

Payable

Dr. Accounts Payable-Vendor

Payment XX Cr. XX
Cash In Bank
 Determination of Requirements

Creation of Purchase
Requisition (Manual or
MRP)

 History of changes in Purchase Requisition

(Change Log) item

 Purchase Requisition status

 Release (Approval) Strategy

 Source Determination and Vendor Selection

 Request for Quotation (RFQ)

 Reference technique in RFQ

creation

 Price comparison of the

quotations
Purchase Order Processing and Monitoring

 Reference technique in PO creation

 Pricing Condition
 History of changes in Purchase
Order (Change Log) header/item
 Purchase Order status

 Release (Approval) Strategy

 Tolerance limit set-up

Goods Receipt

 Goods Receipt with reference to

PO
 Material document and Accounting
document creation after posting
 Resulting to:
 Inventory update
 Update of G/L accounts
 Updates in the Purchase Order
 Update in Material cost (Moving
Average Price)
SAP Three-Step Verification
Logistics Invoice Verification


Payments (A/P)

 Dual control of master record

 Simultaneous updating of subsidiary ledger and general

ledger (minimize reconciliation activities)
 Instant access to details of account balances per Vendor

 Drill down facility down to the original document

 Full audit trail

 Manual or automatic processing of payment

transactions
 Check information on payment transactions
Logistics Invoice Verification

 Creates Accounting Document for

referencing

 Provides 3-way matching (Purchase

Order against Goods Receipt and
the Vendor Invoice)

 It allows credit memos to be

processed, either as invoice
reversals or return deliveries.
 Payments

• Purchase
• Vendor • Released
• Order
• invoice
•?
• invoice • Bank
• Vendor
10
• 20 • Payment
• • 1000 • 1000
•30 • program
• Invoice
•Invoice
• verification

•verificatio
n • Blocked
• invoice

Back to Procurement Process

Payments (A/P)

 Dual control of master record

 Simultaneous updating of subsidiary ledger and general

ledger (minimize reconciliation activities)
 Instant access to details of account balances per Vendor

 Drill down facility down to the original document

 Full audit trail

 Manual or automatic processing of payment

transactions
 Check information on payment transactions