Procure To Pay Cycle.

P2P cycle is a business process where a company procures goods and

services from vendors to produce the goods or deliver the service it
provides to its customers.
Implementing a P2P system is to reduce expenses associated with
inefficient manual processes. In general, this equates to faster order
fulfillment, increased efficiency, lower staff turnover rates, decreased
accounting errors, and more timely information entry into financial
systems.
Ultimately, this leads to better compliance with corporate policies and
regulatory requirements and saves companies money that they have been
overpaying for inferior paper-based procurement methods.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

STEP 1: - PURCHASE REQUISITION

• This is the first stage, at which the user department (say, Maintenance,
Production, Sales and distribution, administration, accounts etc)
identifies their requirements, that is what are the items they require
and based upon which they create a document called as the Purchase
requisition /Purchase request (PR). This document normally contains
description of material, quantity, approximated cost, material
requirement date, preferred or standard vendor etc.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

STEP 2: IDENTIFICATION OF SUPPLIERS/VENDORS

• If no already contracted supplier exists, then the procurement

department shall interact with the user for the possible suppliers or
search on the internet or use referrals or search data base, etc. to
identify the suppliers for the said material.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

STEP 3: REQUEST FOR QUOTATION.

• Once the suppliers are identified, procurement department shall send

the Request For Quotations/Proposal (RFQ/RFP) to the supplier, based
upon the PR. RFQ normally contains description, technical
specifications of the material, quantity of the material, term and
conditions, delivery date of the material, date of submission of the
RFQ, quality standards, validity of the suppliers offer, etc.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

4.MAINTAINED QUOTATION
• In response to RFQ vendor send the quotation to the company.
Purchase department maintained this quotation in system and
compare it for the selection of supplier or vendor.

5.PRICE COMARISON :-
• After maintaining the quotation authority look for price comparison
and according to their standards organization select the particular
vendor amongst multiple vendor and carry forward for the next
process.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

6.PURCHASING INFO RECORD
• PIR GIVES INFORMATION ABOUT TERMS FOR PURCHASING A SPECIFIC
MATERIAL FROM VENDOR. IT ALSO INCLUDES DELIVERY TIME TERMS
AND CONDITIONS QUANTITY NET PRICE AND OTHER IMPORTANT
DATA.

• TYPES OF INFO RECORDS.

• 1.STANDARD
• 2.PIPELINE
• 3.CONSIGNMENT
• 4.SUB-CONTRACTING
Prepared by Yogeshwar wagh- Senior consultant SAP MM.
STEP 7: PURCHASE ORDER (PO)

• The procurement department then shall raise the purchase order

against the contracts and then is send to the supplier. This PO is
prepared in reference of the initial document prepared in the process
i.e. PR.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

 STEP 8: GOODS RECEIPT

• When the goods are received at the warehouse of the organization, the
receiving staffs checks the delivery note, PO number etc and
acknowledges the receipt of material. After the material is received the
same is checked for quantity in case of discrepancy the same is reported
to the vendor. After the quantity verification the material is kept at
inspection locations and material inspector is called for inspection of
material. If material is rejected by the inspector the same is sent back to
the vendor or the vendor is asked for the rectification at the site. The
sound material is moved to respective warehouse locations.

Prepared by Yogeshwar wagh- Senior consultant SAP MM.

Step 9.Invoice verification

• Every organization acquires goods or services to complete its business

needs. Once goods are procured from a vendor and placed in
company’s premises through goods receipt, we need to pay to the
vendor for the acquired goods and services. The amount to be paid
along with the details of the material is provided by the vendor in the
form of a document that is known as the invoice. Before paying to the
vendor, we need to verify the invoice. This process of verifying the
invoice before making a payment is known as invoice verification

Prepared by Yogeshwar wagh- Senior consultant SAP MM.