SAP PROCURE TO

PAY PROCESS (P2P)

BY SIDDHARTH KUMAR
DEFINITION

• Procure-to-pay is the process of integrating, purchasing

and account payable system to create greater
efficiency. It exists within the larger procurement
management process and involves four key stages :
selecting goods and services. Enforcing compliance and
order receiving and reconciliation.
VARIOUS STAGES IN (P2P)
1) REQUIREMENT PLANNING

• With the support of cross-functional stakeholders, develop the business

needs as the first stage in the procure – to – pay process. Procurement teams
draw out high level specifications for goods / products, terms of reference
(TOR) for services , and statements of work after legitimate requirements is
recognized (SOW).
2)REQUEST FOR QUOTATION (T-CODE-ME51N)

A formal purchase requisition is generated when the specifications/TOR/SOW are finalized. After
verifying that all essential administrative criteria are satisfied, the requesters submit the
completed purchase requisition form. From ordinary purchase to subcontracts and
consignments , requisition may be produced for any sort of procurement.
3)CREATION OF PURCHASE ORDER (T- CODE –
ME21N)
Department heads or procurement officials evaluates purchase requisition that have
been submitted. After reviewing the requirements, checking the available budget, and
authenticating the buy request form, approves can either or reject the requisition.
Purchase requisitions with missing information are returned to the originator for
rectification and resubmission.
4)GOODS RECEIPT: (T-CODE- MIGO)

• The warehouse department receives the goods from the vendor as per delivery terms . Warehouse
department enters goods receipt against the purchase order in SAP system. They simply verify the
stock and enter the delivered quantity while posting goods receipts . In this process, the system
will generate two documents – Material document in MM and accounting document in FI.
 5)PREPARATION OF GOODS RECEIPT

• Preparation of goods receipt is one of the most important process in

procurement process cycle. It is matching the goods that a company receives
with the company PO (purchase order). It involves checking the goods are not
damaged and fit for use , verifying the price quantity, payment terms . Goods
movement are entered in to the system with reference of purchase order and
goods receipt material documents are posted, automatically appropriate
general ledgers are posted and stock account are updated.
6)CREATION OF PAYMENT INVOICE – (T-
CODE- MIRO)
• A three- way match between the purchase order , the vendor invoice, and the
receipt of the goods is done after a goods receipt is accepted. The invoice is
authorized and sent to the finance team for payment distribution if no
problems are discovered in the event of errors , the invoice is denied and
returned to the seller with an explanation.
7)VENDOR PAYMENT (F – 53/F 110)

• Based on the due date of the invoice, the invoices will be released for
payment. The treasury department will make the payment. They use
F-53/F110 ( manual /Automatic) for outgoing payment. In this process, the
system will generate one accounting department document in FI.
8)REPORTING OR MATERIAL REPORT (P2P)

• The (P2P) dashboard displays information about active and completed

purchase requisition and approval; purchase orders and AP invoice; and how
these documents relate to each other. The dashboard also displays
information about suppliers and payment to those suppliers.
Thank you 🙏.