The procure to pay process involves 9 steps: 1) determining requirements, 2) sourcing, 3) vendor selection, 4) purchase order processing, 5) order monitoring, 6) goods receipt, 7) invoice verification, 8) payment verification, and 9) payment. The process tracks requirements and ensures accurate matching between purchase orders, goods receipts, and invoices. It allows efficient payment of vendor invoices and updating of accounting records.

1. PROCURE TO PAY

2. Procure to Pay
1. DETERMINATION
OF REQUIREMENTS
9. PAYMENT
8. INVOICE
VERIFICATION
Procurement 2. SOURCE DETERMINATION
6. GOODS
RECEIPT
5. ORDER 3. VENDOR SELECTION
MONITORING 4. PO
PROCESSING

3. 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 XX
Goods Receipt Cr. GR-IR Clearing Account XX
Invoice Dr. GRIR Clearing Account XX
Verification Cr. Accounts Payable-Vendor XX
Accounts Payment Run
Payable
Dr. Accounts Payable-Vendor XX
Payment Cr. Cash In Bank XX

4. 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

5. Source Determination and Vendor Selection
 Request for Quotation (RFQ)
 Reference technique in RFQ
creation
 Price comparison of the quotations

6. 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

7. 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)

8. SAP Three-Step Verification

9. Logistics Invoice Verification


10. 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

11. 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.

12. Payments
•Purchase
•Vendor •Order
•Released
•invoice •? •10 •invoice •Vendor •Bank
•20 ••Payment
Payment •1000
•1000
•30 ••program
program
••Invoice
Invoice
••verification
verification
•Blocked
•invoice
Back to Procurement Process

13. 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