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P2P Report-1

The document discusses the key aspects of the procure to pay (P2P) process, including sourcing, purchase orders, vendor master setup, invoice processing, and payment methods. The P2P process involves raising a requisition, identifying a supplier, creating a purchase order, receiving goods, processing invoices, and making payments. Key steps include sourcing, purchase order creation, goods receipt, invoice receipt, processing, and payment. The document provides details on each stage of the P2P cycle.

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Keerthana Karthi
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187 views7 pages

P2P Report-1

The document discusses the key aspects of the procure to pay (P2P) process, including sourcing, purchase orders, vendor master setup, invoice processing, and payment methods. The P2P process involves raising a requisition, identifying a supplier, creating a purchase order, receiving goods, processing invoices, and making payments. Key steps include sourcing, purchase order creation, goods receipt, invoice receipt, processing, and payment. The document provides details on each stage of the P2P cycle.

Uploaded by

Keerthana Karthi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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P2P- Procure to Pay

THREE TOWERS OF PROCESS


P2P-Procure to Pay
O2C-Order to Cash
R2R-Record to Report
PROCURE TO PAY
P2P is a process that involves all the activities right from purchasing a product
till making the payment. It is the process cycle that converts the purchase
request into payment made after the Goods/Services received.
P2P Process Cycle

Sourcing
Payments
Team.
Team. 1.Requestor raises
Requisition.
Processing 8.Payments are 2.Source is
Team. made. Vendor
Identified.
Master.

3. Vendor
7.IR’s are verified P2P CYCLE created/modified.
and accounted.

Scanning
6.Invoices are 4.PO is Created.
Team.
received.
5.Goods are
Client. Received. Client.

1. Requestors raise the requisition.


2. Requisition will be shared with the purchase department/sourcing team.
3. Searching of vendor by sourcing team.
4. Will receive Quotation by the vendor team.
5. Process of negotiation by vendor master.
6. Vendor master creates vendor information.
7. PO is created by the client.
8. Goods deliver to the place with GR.
9. Invoice will issue to the scanning team.
10.Processing team check all the invoices and enter to the ERP.
11.Final payment is made by the payment team.
P2P- Procure to Pay
Sourcing Team:
Sourcing team take place from Purchasing of Goods till Delivery of Goods.

Procurement:
It is the acquisition of Goods and Services at the best possible total
cost of ownership, in the right quantity, at the right time, in the right
place and from the right source for the direct benefit or use of
corporations, individuals.
Procurement life cycle:
1. Collecting of Information of different vendor in the market.
2. Supplier contact share the PRF and will give Quotation.
3. If the seller agrees to sell, then they will Review the Background.
4. After quotation is received negotiation on Price, Quantity, when the
goods to be delivered, where the goods to be delivered will be decided.
5. Fulfilment.
6. Consumption or maintenance and disposal process will be taken place.
7. Renewal (If we are taking from the same vendor).

Purchase Orders:
Purchase order is a contract (legal evidence) between the buyer and the seller.
Purchase Order is ERP an entry performed by the buyer to procure goods or
services.
Purchase Order contains the following
1. Name and Address of the company.
2. Name and Address of the Vendor.
3. Delivery Date.
4. Product Description.
5. Unit Price.
6. Quantity.
7. Mode of Payment- BANK-Wire/ACH.
8. Payment Terms-15 days,30days.
9. Total Amount.
P2P- Procure to Pay
Specific Approval to Raise PO:
His manager- validity of purchase in company’s interest.
Finance Team- availability of funds for the purchase
Procurement team.
Purchases orders-GIT and RNB
GIT- Goods in Transit
Open POs indicate that they have been billed for more than what has been
delivered.
Example: There will be no GR.
RNB- Received Not Billed
Open POs indicate that we have received the goods that have been ordered.
However, we have not been billed for the same.
Example: There will be no IR.
There are Three-way methods:
2way PO>=IT.
3way PO>=GR>=IR.
4way PO>=GR=GA>=IR.
Accounting Entries:
1. Po Creation – NO accounting entry
2. Goods Delivered – Purchase a/c Dr
To GR/IR a/c
3. Invoice Received – GR/IR a/c Dr
To Creditors a/c
4. Payment Made – Creditor’s a/c Dr
To Bank a/c

Resultant entry – Dr: Inventory a/c


Cr: Bank a/c
P2P- Procure to Pay
VENDOR A/C
Vendor account consists of the following
Vendor Code
Vendor Name
Vendor Address
Vendor Contact No
Tax Identification Details – W9 FORM (Business Justification Form)
Bank Details – SORT CODE(USA) – copy of cancelled Cheque (Void
Cheque)
Product Information
Payment Method – WIRE /ACH / BACS / CHAPS payment
Payment terms – credit period
Terms of Delivery (INCOTERMS)
Order Currency
VENDOR MASTER – Prerequisites
VMR is received from an authorized person along with the W9 FORM.
W9 is a form which vendor provides to the client with all the details of the
vendor. It is also known as business justification form.

TYPES OF VENDORS
1. General Vendors
Purchasing Vendors (Used for placing Purchase Orders).
Payable/Accounting Vendors (Used for making Payments to
Vendors).
Inter-company Vendors (Used for transactions between two different
legal entities of the same concern).
Intra-company Vendors (Used for transactions between two different
departments of the same organization).
2. Employee Vendors
Employees are also setup as vendors to settle Employee Payables or
Employee Expenses.
P2P- Procure to Pay
INVOICE PROCESSING FLOW

Invoice received(post/Email)

Invoice Scanning (indexing team)

Conduct Preliminary Check

Verify Duplication

Process Invoice

PO Invoices- 3way and 2way match non-PO GL, Signature, limit


QC and reconcile the ledger and statements

Payment Proposal

Vendor Receives Payment.


Invoice Process
Scanning Team- Scanning is the process of verifying and entering the invoice in
the Workflow Tool
Indexing – The process of ordering or recording the transactions in the
workflow tool software, like vendor name, address, bank details, currency etc.
Posting team – Invoices are entered, then check and verify the invoices. It has
three methods 2 way, 3way,4way match.
Once everything is entered the Journal will be
GR/IR a/c Dr
To vendor a/c
P2P- Procure to Pay
And must press the POSTING button at last if there is any clarification needed
there will be an option for CLIENT RESOLUTION to resolve the queries.
NON-PO Invoice process
Scanning Team- Scanning is the process of verifying and entering the invoice in
the Workflow Tool
Indexing – The process of ordering or recording the transactions in the
workflow tool software, like vendor name, address, bank details, currency etc
Approval and POSTING – GL code, Routing code, and Cost Center are also
checked for non-po based invoices.
Duplicate Invoice Check also forms a very important control point.
The name of the approver needs to be clearly VISIBLE, and it will be verified by
the ERP tool called “SIGNATURE DATABASE”.
To process the non-po these followings are mandatory
 GL Code.
 Cost/profit center.
 Approvers Signature.
 Authorization Limit.

Quality Check (QC)


QC is the process where the quality of the work done, or invoices posted in the
system are checked/validated.
Common Field that are checked
Invoice Date, Invoice Number, Currency, Quantity, Bill to Name, Vendor
Details, PO, Payment Method, and Terms.
There are two types of QC:
1. Concurrent Audit (they verify whether the invoice is correct or not, if
there are any mistakes, they will call back to the invoice processing
team. concurrent audit is not on test checking but on substantial
checking of transactions.
2. Duplicate checks are a type of check that includes a small piece of paper
behind each check that serves as a carbon copy. Duplicates are
P2P- Procure to Pay
automatically created for every check written, making it easier for
someone to control their recordkeeping.

CHECK IN MODE OF PAYMENT:


WIRE payment (USA) –Wire Transfer Payments are manual payments initiated
out of the bank WEB site. Will receive payment on the same day.
There are 2 types: International, Domestic purpose
ACH (Automated Clearing House) – It takes 1 working day – cost effective.
BACS (Bankers Automated Clearing Service) – It takes 3 working day – popular
in UK and Europe and they have sort key (unique 6-digit number identifying
the location).
CHAPS (Clearing House Automated Payment System) –It is like wire transfer –
Where the money is credited on the same working day – cost effective.
International Payment – payment made between 2 counties or regions.
It takes 5 working days. IBAN a/c number is important requisite for an
international payment.
SWIFT Code are used for payments for any foreign country payments.

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