Procure to Pay (P2P) Process Flow

Procure to Pay (P2P) Process Flow

Purchase to Pay, also known as Procure to Pay and abbreviated to P2P, comprises a number of stages that describe the end-to-end process from an organisation ordering a product or service from suppliers, through to making the subsequent payment for those products or services. The main stages of this process are creating requisition, selecting vendor,  product ordering, receipting of delivery of product/service,  invoice processing, making payment and posting to General Ledger.

• The process begins with planning what Goods are required, when they need and the price that the company can afford to pay for materials.
• Then the company prepares a list of Suppliers that they think can provide the Goods for them.
• The company asks each of the Suppliers to submit a quotation(request for quotation), which includes the price, terms of delivery, quality of materials, and any other information that they need for making their decision. This stage could also involve negotiating with the Supplier for the best deal.
• Once a Supplier has been chosen, the buyers create a purchase requisition form (PO Requisition)that includes information such as the description of goods and services, department account number, signatures of the authorised managers, delivery instructions, and quotation from the authorised Supplier.
• A purchase order(PO) is sent to the Supplier to supply the goods along with instructions as to the conditions under which they have to be supplied to ours inventory.
• Once the company receives the goods from the supplier, the purchasing department prepares a Goods Receipt Note(GRN). This is an important document that can later be used for reconciling if what the seller delivered was matching what they asked for.
• The Goods Receipt Note is compared with the Purchase Order to validate if the two match. If there are any discrepancies, the buyer can contact the seller and post a complaint. Checks are made if the goods are suitable for use or not(Goods Inspection) if the correct quantity has been delivered if all the goods meet the ordered specifications, and they are priced according to the terms of the purchase order. If any goods are damaged then the buyers will have to contact the sellers and ask either for a replacement or a refund.
• Once the verification of the goods is done then invoice is created and the necessary approvals from the higher managers are obtained.
• Once invoice is approved then as per payment terms(Immediate Days,60 Days or 120 days ) make the payment to respected supplier and then post to General Ledger(GL) and then P2P  process completed.  

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