Procure To Pay (P2P) Life Cycle

Procure to Pay is a complete life cycle of procurement i.e. acquisition of Goods, Services or Works form external world. It integrates the Purchasing with the Accounting module.It enables the buyer to buy the best fit Item with respect the price, quality, quantity, time and location.

The below diagram mentions the whole P2P life cycle which initiates from Requisition and closes at Payment.

Requisition :
It is formal document raise by a requester to mention the need or buy of some goods and then go through the company authorization workflow. After it is finalized or approved it converts to a Purchase Order. It mentions the required goods, time frame, location amount and price.

There are two categories of Requisitions we can use. The person/Organization who request for goods is called Buyer/Requester and the person/Organization who supplies the same is called Supplier/Vendor.

• Internal Requisition : Internal requisition mentions the goods transferred from an inventory to another inventory within the organization.
• Purchasing Requisition : Purchasing Requisition mentions goods are requested/needed to buy from a third party i.e. Supplier.

Purchase Order :

It is a Commercial document and first official document provided from a buyer to a supplier. It is the contract document which mentions the Goods, agreed price, quantity, need by date and shipping location etc.

There are the following categories of Purchase orders exist.

• Standard PO : This type of purchase Order is created if the purchase goods once from a supplier. Here the user should know the price, quantity, payment terms, time and location clearly.
• Blanket Purchase Agreement : This type of PO is used to mention the agreed price of the item before actual purchasing. Here the user knows about the goods and services to be purchased but don't know about the exact delivery schedule. We can use a Blanket Release against a Blanket Purchase Agreement to create a actual Purchase Order.
• Planned PO : This is a long term purchasing agreement to buy goods and services from a single supplier. User needs to about the tentative delivery schedule and all the details of the goods and services.  We can issue a scheduled release against a planned order to create a actual Order.
• Contract Purchase Agreement : This is an agreement with suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing. You can later issue standard purchase orders referencing your contracts.

Advance Shipment Notification(ASN):

It is a formal electronic document provided by supplier to buyer prior to the item delivery which includes the goods delivery details i.e shipment date, Identification number, freight information and item details etc. Supplier can create an ASN using various ways like using iSupplier portal, XML gateway etc. An ASN can have billing information too.

Receipt:
For receive goods against a Purchase order this document is created. It has all the information of date of receiving, location, Inventory and Order details.

There are three types of Receipt routing way are there.

• Direct Delivery : The received good directly store into corresponding Inventory.
• Standard Receipt : The received quantity at first receive to a location and then transferred to inventory.
• Inspection Required : In this type, goods received to a location then inspected for quality then deliver to inventory.

Invoice :

Invoice is a document created by supplier to the buyer representing the due amount against the goods or services provided. It can be created against a Purchase Order or a Receipt depending upon the Invoice match Option. 

There are the following types of Payable Invoices are exist:

• Standard Invoice: This is the Invoice is a document created by supplier to the buyer representing the due amount against the goods or services provided.
• Credit Memo : This is a type of Invoice created by supplier to Buyer informing the negative amount.If a customer returns some of the goods then the supplier raise a Credit memo to balance the transaction amount.
• Debit Memo : This type of invoice is created by a Buyer on behalf of supplier with a negative quantity to balance the transaction amount.
• Mixed Type : This type of invoice can have the either positive or negative total amount and can be matched with a Purchase order or with an parent invoice.
• Prepayment : This type of invoice is raised to record the advance payment to a Supplier.
• Expense Reports : Expense reports are the invoices that represent amount due to an employee for his business related expenses.
• Recurring Invoice : This is an invoice type which automatically generated using an Invoice template for a required time interval  as rent.  

Payments : 
It is the payment made to supplier against an Invoice.



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