Requisitions

Catalog Content
Purchase Order
Management

Procure to
Receiving

Pay Process
RFQ's
Invoice/payment

(P2P)

Supplier Management Reporting

Supplier Performance
What is Procure to Pay Process?

The Procure to pay process is also commonly known as

P2P Cycle. It is followed by any organization in any ERP
system if they have to purchase any products, it could
be raw materials, office supplies, infrastructure etc.
Where there is a purchase there is a payment, the
whole process of purchasing a product and making
respective payments for that to the supplier is known as
Procure to Pay.
The various steps involved in Procure to pay process
are

Creating Requisitions.
Creating Purchase Order.
Creating Inventory Receipts.
Enter AP Invoice.
Making payments.
Transferring to GL.
Bank Reconciliation.
 Creating Requisitions
Requisition is a formal request to purchase something, for
instance material, office supplies, etc. only an employee
of the particular organization can create a requisition.
Types of requisitions are:-
Internal Requisition
Purchase Requisition
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Accounting entries for requisition:
EventRequisition
Accounting EntriesNo Entries
 Important tables for requisition
a) po_requisition_headers_all ( segment1 column in table represent requisition
number)
b) po_requisition_lines_all
c) po_req_distributions_all
Note: (requisition_header_id is the link between po_requisition_headers_all and
po_requisition_lines_all)(requisition_line_id is the link between
po_requisition_lines_all and po_req_distributions_all)
Note: Suppliers
You must define a supplier before performing most activities within Purchasing and
Payables.
You optionally enter a recommended supplier on a requisition.
You need a supplier to issue a request for quotation.
You use that same supplier when you enter a quotation.
You need supplier information for purchase orders.
You receive goods or services from suppliers.
You return goods to suppliers.
You must pay the supplier for the goods or services purchased.
 Creating Purchase Order
Apurchase order(PO) is a commercial document issued by a buyer
to a seller, indicating types, quantities, and agreed prices for
products or services the seller will provide to the buyer. Sending a PO
to a supplier constitutes a legal offer to buy products or services.
Types of Purchase Orders:-
Standard Purchase Order
Planned Purchase OrderBlanket Agreement
Contract Agreement
**************************************************************
Accounting Entries for Creating Purchase Order:
EventCreation of Purchase Order (PO)
Accounting EntriesNo Entries
Important Tables for creation of Purchase order

1) po_headers_all
2) po_lines_all
3) po_distributions_all
4) po_line_locations_all
Note: (po_header_id is the link between all these
tables)
 Creating receipts
After creating the Purchase order we will create a receipt to
receive the items in the purchase order. PO being sent to
Supplier, we can expect the products to be delivered to us. Once
items / products are delivered to us we will create Receipt to
record the details of the products received.
********************************************************
Accounting Entries for Creating Receipts:
EventCreate Receipt
Accounting EntriesInventory Receiving a/c Dr Accrual a/c
Cr.
Important Tables for creation of
Purchase order
1) rcv_shipment_headers
2) rcv_shipment_lines
3) rcv_transactions
Note: (shipment_header_id is the link between
rcv_shipment_headers and rcv_shipment_line
po_header_id is the link between rcv_shipment_headers
and rcv_transaction)
 Create Invoice in payables
Once the goods are received, now we have to pay the vendor for the goods
purchased and hence the invoices are created.
Types of invoices:
Standard Invoice
Credit Memo
Debit memo
Mixed Invoice-It can also be called as credit/debit memo.
Prepayment
Expense report

************************************************************************************
Accounting Entries for Creating Invoice:
EventCreation of inventory item invoice
Accounting EntriesInventory AP Accrual a/c Dr To Liability a/c Cr.
Important Tables for creation of
Purchase order
1) ap_invoices_all
2) ap_invoice_distributions_all
Note: (invoice_id is the link between ap_invoices_all and
ap_invoice_distributions_all)
 Making a Payment
Once invoices are validated, they can be paid.
Payables provides the information that you need to make
effective payment decisions, stay in control of payments to
suppliers and employees, and keep your accounting records
up-to-date so that you always know your cash position.
**********************************************************
Accounting Entries Payments:
EventMaking a payment
Accounting EntriesInventory AP Accrual a/c Dr To
Liability a/c Cr.
 Important Tables for Payments
1) ap_checks_all
2) ap_invoice_payments_all
3) ap_payment_schedules_all
 Transfer to GL
After the payment is done run the program Payables
Transfer to General Ledger
After we validate the data then we perform the
accounting and the data goes and sit in the interface
tables, so we need to run the standard program to post it
finally.
Procure to Pay Flow Chart
Create
Requisition

Create
Purchase Send To
order supplier

Enter
Inventory At the time of receiving
Receipts
goods

Enter
Payables Received from
Invoice supplier

Make
payments
against
invoice

Create
Accounting
and transfer
to GL
Accounting Cycle of Procure to
Pay Process
Transaction Point Debit Credit
PO Creation - -
Create Receipt Inventory Receiving a/c Accrual a/c

Inspection - -
Delivery of items Inventory valuation a/c Inventory receiving a/c

Payable account when Accrual a/c Liability a/c

matched to PO

Payment made to vendor Liability a/c Bank clearing a/c

When cleared in bank Bank clearing a/c Bank a/c

Inventory issued to dept Expense a/c Inventory valuation a/c

 Entry Explanation
Entry 1.
When We Receive Inventory, The Following Accounting Entry Will
Be Generated.
Description Dr. Cr.

Inventory Receiving a/c xxxxx

Accrual a/c xxxxx

When the inventory is received at Receiving Organization then the

above entry will be generated. Receiving of Inventory can be
made through Purchasing Responsibility as well as Inventory
Responsibility.
Entry 2.
When Inventory Is Delivered To Sub Inventory Stores
Then The Following Accounting Entry Will Be Generated.
Description Dr. Cr.

Material Account xxxxx

Inventory Receiving a/c xxxxx

When the Inventory is delivered in the Stores this

account will be hit in the Inventory Organization.
Entry 3.
When We Book Liability At Invoice Level, The Following
Accounting Entry Will Be Generated.
Description Dr. Cr.

Accrual Account xxxxx

Liability Account xxxxx

At the Invoice Level when we book the liability the

supplier liability account will be credited.
Entry 4.
When Payment Is Made To Supplier, The Following
Accounting Entry Will Be Generated.
Description Dr. Cr.

Liability Account xxxxx

Bank Clearing Account xxxxx

Cash Clearing Account is defined in the Payables

Responsibility while defining the banks.
Entry 5.
When Reconciliation Is Made In Cash Management, The
Following Accounting Entry Will Be Generated.
Description Dr. Cr.

Bank Clearing Account xxxxx

Bank / Cash Account xxxxx

Switch to the Cash Management Responsibility for

Reconciliation purpose. When we made the Reconciliation
then the above Accounting entry will be generated.