Procure to Pay (P2P) – End-to-End Process Explained

 Procure to Pay (P2P) – End-to-End Process Explained

The Procure-to-Pay (P2P) process covers the complete cycle from identifying a business need to making payment to the supplier. A strong P2P process ensures cost control, compliance, and efficient cash flow management.

🔹 1. Requirement Identification
• Business/user identifies the need for goods or services
• Budget availability is checked

🔹 2. Purchase Requisition (PR)
• PR is raised in ERP (SAP/Oracle/etc.)
• Includes quantity, specifications, and delivery date
• Approval as per delegation of authority (DOA)

🔹 3. Vendor Selection & Onboarding
• Vendor evaluation and selection
• KYC, bank details, tax documents collected
• Vendor master creation in ERP

🔹 4. Purchase Order (PO) Creation
• PO issued to vendor with agreed terms
• Price, quantity, delivery, and payment terms defined
• PO approval and dispatch to vendor

🔹 5. Goods Receipt / Service Entry
• Goods Receipt Note (GRN) for materials
• Service Entry Sheet (SES) for services
• Confirms receipt and quality of goods/services

🔹 6. Invoice Receipt
• Invoice received via email / portal / e-invoicing
• 2-way or 3-way matching initiated
• PO vs GRN vs Invoice

🔹 7. Invoice Verification & Accounting
• Price, quantity, and tax validation
• Posting of invoice in ERP
• Exception handling for mismatches

🔹 8. Payment Processing
• Payment proposal run as per due date
• Approval of payment batch
• Payment via bank transfer / cheque / NEFT / RTGS

🔹 9. Vendor Reconciliation & Reporting
• Vendor ledger reconciliation
• Aging and outstanding analysis
• Compliance and audit reporting

⸻

✅ Key Benefits of an Efficient P2P Process

✔ Better cost control
✔ Improved vendor relationships
✔ Reduced fraud risk
✔ Timely payments
✔ Strong audit compliance

⸻

📌 Where P2P Professionals Add Value
• Automation & process improvement
• Exception handling
• Vendor query resolution
• Compliance with tax & internal controls