Lecture Notes: Procure-to-Pay Process

Introduction

• Discussion on the purchasing process in large organizations.
• Definition of P2P (Procure-to-Pay):
  • 'Procure' means to obtain or get something.
  • P2P starts when an organization identifies a need and ends with payment for the purchase.

Overview of P2P Process

• Generalized into a ten-step process.
• Example: Purchasing a laptop in a corporate organization.

Steps in the Procure-to-Pay Process

Steps 1-6: Procurement Cycle

1. Receive Approved Purchase Request

   • Request includes product description, quantity, and specifications (e.g., configuration, memory, OS).
   • Procurement department receives request.

2. Invite Quotes from Vendors

   • Procurement team invites quotations from different suppliers.

3. Issue Purchase Order (PO)

   • Formal PO issued to vendor after approval from appropriate authority.

4. Receive Goods or Services

   • Goods delivered to organization.
   • Prepare Goods Received Note (GRN) if accepted or Material Receipt Note (MRN) if rejected.

5. Create Receipt or Book Inventory

   • Document preparation to record goods entering the organization.

6. Send Supplier Invoice to Accounts

   • Invoice sent to Accounts for payment processing.
   • Invoice includes descriptions, quantities, quality, and delivery details.

Steps 7-10: Payment Cycle

7. Receive Invoice Copy by Accounts Department

   • Usually received in digital format.

8. Process Invoice

   • Enter invoice data into system.
   • Match with PO, GRN, and quality report.

9. Approve Final Payment

   • Payment approved by appropriate authority.

10. Release Payment to Supplier

• Calculate due date and release payment to supplier.

Summary

• Steps 1-6: Procurement part of the cycle.
• Steps 7-10: Payments part of the cycle.
• Overall understanding of P2P from procurement to payment completion.

Future Learning

• Course will cover in-depth details of each step.
• Exploration of individual documents involved in the P2P process.