[Music] continuing with the example shed let us discuss how the purchasing process works in a big organization now every organization has requirements of buying goods and services for internal usage the whole system by which an organization decides what to purchase who to purchase it from and finally how to pay the party from whom the goods are purchased is known as P - P P K P stands for procure to pay the dictionary meaning of procure is to obtain something or to get something hence we can understand procure to pay as a process which commences when an organization has a need to buy something and ends once the payment has been made for it the p2p process takes place in various steps however for ease of understanding let us generalize it into a ten step props as you yourself in a big corporate organization like ABC if you need to buy the same laptop you just can't order it yourself we have to first raise a request of the product you want with its description and the quantity required once you face a request for a laptop the purchase of procurement department of the organization receives a request for purchasing the laptop on your behalf that is your step number one in the p2p process receiving and approved purchase request the purchase request needs to have all details for the laptop like the configuration the version the operating system total memory installed etc after receiving the request from you the procurement team will analyze the request you have made and try to find out the best possible product available in the market which meets your requirements that is it will try to invite quotation from various vendors vendors are nothing but suppliers of goods and services now this is step number two of the p2p process the next step of course is to order the laptop the organization will then issue a formal purchase order to the vendor a purchase order is also known as a P o the approval of a P o will be obtained from the appropriate level of authority before issuing it this is step number three which is also known as issuing a formal P o let us now revise the steps we have already discussed step one is to receive the approved purchase request step two is to invite codes from the vendors step three is to issue a purchase order [Music] continuing the way the laptop was delivered to Michelle's home the goods so ordered are delivered to our organization this is step number four which is to receive goods or services from the supplier once you've received the laptop you have to prepare a document to have a record of the goods entering the organization so you go ahead and prepare something known as a receipt note the technical word for it is goods received node or grn after the goods enter into the organization the goods are inspected in accordance with the purchase order issued by the authorized Department and a report on quality is prepared a grn is prepared only if the goods are accepted however if the goods are rejected you will prepare a material receipt note or an M RN now this is your step 5 which is creating a receipt or booking of inventory after booking the inventory the invoice from the supplier is sent to the Accounts Department to book the entering the books of accounts so that the payment can be processed and hence a payment can be made to the vendor this is step number 6 sending the supplier invoice to the Accounts Department now let us discuss what is an invoice an invoice is a document which originates from the seller in case of credit sales it includes details like the description quantity quality waived amount and date of delivery of goods in all essence an invoice is nothing more than a pillow once again let us now revise the steps which we have discussed so far step 1 but you receive the approved purchase request step 2 was inviting quotes from vendors step 3 was issuing a formal purchase order step forward receiving goods or services from the supplier step 5 booking inventory or creating the seat step 6 sending the supplier invoice to the Accounts Department [Music] [Music] but till now what we have done is we have actually procured the laptops of this who completes the procurement cycle from the next step onwards the payment part of the process begins one thing which is important and you to be noted here is that in today's technology addict world the hard copy of invoice will not be received by the Accounts Department more often the invoice would be scanned and the scanned invoice will be received by the Accounts Department now that's your step number seven which is receiving a copy of the invoice by the Accounts Department or the Accounts Payable department which is mostly done in a digital format the invoice is then entered in the data form in the system of the organisation before entering the data it will be matched with all the documents which we have discussed above that is the purchase order that Goods receive no the quality report etc this is also known as the processing of an invoice and that's step number eight in boys till the above step every aspect of the invoice goods and vendor have been thoroughly verified and hence the areas of errors and discrepancies have been fairly kept in check therefore now the next step would be to approve the payment to be made to the vendor by the appropriate level of authority and that becomes your step number nine to approve the final payment and once the final approving of the payment is done the due date of the payment is calculated and finally the payment is released to the supplier the release of the payment is of course the last step of the p2p cycle from the above it can be said that steps 1 to 6 from receiving the purchase requisition to sending the supplier invoice to the Accounts Department corresponds to the procurement part and steps 7 to 10 that is scanning the invoice till releasing the payment to the supplier correspond with the payments part the cycle okay now we can say that we understand the term p2p as a whole which is obtaining something - making the payment from the same but you pay so now what we have done is that we have a very high-level view of the entire procure-to-pay cycle as we move throughout this course we are going to have a lot more in-depth coverage of every topic not only will we go into the details of every process but we will also look at individual documents and understand the contents of a document have fun