PROCURE TO PAY

Procure to Pay

1. DETERMINATION
OF REQUIREMENTS
9. PAYMENT

8. INVOICE
VERIFICATION

Procurement

2. SOURCE DETERMINATION

6. GOODS
RECEIPT

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

Goods Receipt

Dr. Inventory/Asset
Cr. GR-IR Clearing Account

Invoice
Verification
Accounts
Payable

Payment

XX
XX

Dr. GRIR Clearing Account

XX
Cr. Accounts Payable-Vendor
XX

Payment Run

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

Purchase
Order

Released
invoice

? 10
20

1000

30

Invoice
Invoice
verification
verification

Bank

Vendor

Payment
Payment
program
program

1000

Blocked
invoice

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