PROCURE TO PAY

Procure to Pay
9. PAYMENT

1. DETERMINATION OF REQUIREMENTS

8. INVOICE VERIFICATION

Procurement
6. GOODS RECEIPT

2. SOURCE DETERMINATION

5. ORDER MONITORING

4. PO PROCESSING

3. VENDOR SELECTION

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 Cr. GR-IR Clearing Account XX XX

Goods Receipt

Invoice Verification Accounts Payable

Dr. GRIR Clearing Account XX Cr. Accounts Payable-Vendor XX

Payment Run

Payment

Dr. Accounts Payable-Vendor Cr. Cash In Bank

XX XX

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

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 (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

Vendor invoice

? 10
20 30

Purchase Order

Released invoice

Vendor
1000

Bank

Invoice Invoice verification verification

Blocked invoice

Payment Payment program program

1000

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