Procure to Pay Cycle

In this article, we will see the steps involved in Procure to Pay Cycle. Here is the diagrammatic representation:

1) Create Requisition:
Requisition is nothing but a formal request to buy something li!e Inventory material, office supplies etc" needed for the enterprise. #nly an employee can create one. $here are two types of requisitions: Internal Requisition: Internal requisitions provide the mechanism for requesting and transferring material from one inventory to other inventory. Purchase requisition: %nli!e Internal requisitions, Purchase requisitions are used for requesting material from suppliers. &avigation: Purchasing 'ision #perations %()" * Requisitions * Requisitions Choose the requisition type and enter the Item, quantity, Price details in the +ines tab.

In (ource ,etails tab, specify the -uyer name.

Clic! the ,istributions button. .nter the Charge )ccount.

(ave the wor!. $he status of the requisition will now be /Incomplete0. )nd now the )pprove button is highlighted. $he requisition needs to be approved first before proceeding further by the concerned authority. (ubmit this requisition for )pproval by clic!ing on the )pprove button. $he status will now be updated to /In Process0 .$he wor!flow then will send an )pproval notification to the concerned person derived based on hierarchy used1Position or (upervisor hierarchy" using which he can )pprove or Re2ect the requisition.

)t any time the status of requisition can be chec!ed using the Requisition summary window. &avigation: Requisitions * Requisition (ummary .nter requisition number and clic! on the find button.

3e can also chec! the Action History of requisition it will show details about who has submitted, approved and cancelled the requisitions" as below: &avigation: $ools menu * )ction History. Underlying Tables: P#4R.5%I(I$I#&4H.),.R(4)++ P#4R.5%I(I$I#&4+I&.(4)++ P#4R.54,I($RI-%$I#&(4)++

2) Create Purchase Order:

$here are 6 types of Purchase #rders: 7. Standard PO: ) (tandard P# is created for one8time purchase of various items 9. Planned PO: ) Planned P# is a long8term agreement committing to buy items or services from a single source. :ou must specify tentative delivery schedules and all details for goods or services that you want to buy, including charge account, quantities, and estimated cost. ;. Blanket agree ent: ) -lan!et P# is created when you !now the detail of the goods or services you plan to buy from a specific supplier in a period, but you do not !now the detail of your delivery schedules. 6. Contract agree ent: Contract purchase agreements are created with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing

Navigation for creating a standard PO: Purchase Orders ! Purchase Orders Choose type as (tandard Purchase #rder. .nter the (upplier, -uyer. In the +ines tab, specify the line number, line type, Item, quantity, price etc.

Clic! $erms to enter terms, conditions, and control information for purchase orders. Clic! Currency button to enter and change currency information for purchase orders, R<5s, and quotations. Clic! (hipments button to enter multiple shipments for standard and planned purchase order lines Purchase order shipment specifies the quantity, ship8to organi=ation and location, date you want your supplier to deliver the items on a purchase order line, and country of origin for the items. 3hen you save, Purchasing creates distributions depending on the default information available.

$o enter more shipment information, select the >ore tab. 7. .nter the Receipt Close $olerance percent, Invoice Close $olerance percent to set the receiving and invoice close point. 9. (elect one of the following options for >atch )pproval +evel: T"o#$ay: Purchase order and invoice quantities must match within tolerance before the corresponding invoice can be paid. Three#$ay: Purchase order, receipt, and invoice quantities must match within tolerance before the corresponding invoice can be paid. %our#$ay: Purchase order, receipt, accepted, and invoice quantities must match within tolerance before the corresponding invoice can be paid. 7. (elect an Invoice >atch #ption: Purchase Order: Payables must match the invoice to the purchase order. Receipt: Payables must match the invoice to the receipt. (ave the wor!.

Clic! the Receiving Controls button to enter receiving control information for purchase orders. ? .nter the ma@imum acceptable number of ,ays .arly and ,ays +ate for receipts. ? .nter the )ction for receipt date control. ? .nter the ma@imum acceptable over8receipt $olerance percent receipts that e@ceed the quantity received tolerance". ? .nter the )ction for #verreceipt 5uantity.

? (elect )llow (ubstitute Receipts to indicate that receivers can receive substitute items in place of ordered items. ? .nter the default Receipt Routing that you assign goods: ,irect ,elivery& Inspection Required or (tandard Receipt. ? .nter the .nforce (hip $o location option to determine whether the receiving location must be the same as the ship8to location. (ave the wor!.

Clic! ,istributions button to enter distributions for the shipments. (elect more tab to enter more details and the requisition number optional". (ave the wor!.

Clic! on the )pprove button to initiate the )pproval process.

Underlying Tables: P#4H.),.R(4)++ P#4+I&.(4)++ P#4,I($RI-%$I#&(4)++ R.54H.),.R4R.<.R.&C.4&%> in ,istributions table is the Requisition number for this P#" P#4+I&.4+#C)$I#&(4)++

')Create Recei(t:
Create a receipt to receive the items in the Purchase #rder. &avigation: ReceivingAReceipts .nter the P# &umber and select find button.

Bo to +ines, chec! the lines you want to receive in the P#.

Clic! on Header button and (ave which creates the receipt.

Recei(t Tables are: RC'4(HIP>.&$4H.),.R( RC'4(HIP>.&$4+I&.( +ines $able has P#4H.),.R4I,"

))Create *n+oice in Payables:

#nce the goods are received, itCs time to pay the vendor for the goods purchased and hence the invoices are created. &avigation: Payables, 'ision #perations %()" * InvoicesA.ntryAInvoices .nter type ?? (tandard, supplier information and amount.

Clic! the >atch button to match to either Purchase #rder or Receipt depending on the Invoice >atch option specified on the P#" and avoid manually entering the invoice. .nter the P# &umber you want match to and clic! <ind.

(elect the lines required and clic! on >atch button.

Clic! on ,istribute button to navigate to the >atch to Purchase #rder ,istributions window. $his creates the invoice and you can see the status of the invoice as /&ever 'alidated0. it has to be 'alidated and )ccounted before you can pay it. 'alidating the Invoice: Clic! on )ctions -utton and (elect /'alidate0. Clic! on #D button.

&ow you can see the status of the invoice as /'alidated0, if there are no issues during validation.

Create )ccounting .ntries: Clic! on )ctions -utton and (elect /Create )ccouting0. Clic! on #D button.

&ow we can see the )ccounted status as /:es0.

:ou can see the )ccounting .ntries here: $ools A'iew )ccounting

*n+oice Tables: )P4I&'#IC.(4)++ )P4I&'#IC.4,I($RI-%$I#&(4)++ ,ccounting -ntries Tables: )P4)CC#%&$I&B4.'.&$(4)++ )P4).4H.),.R(4)++ )P4).4+I&.(4)++

.)/aking a Pay ent:

Bo to the Invoice window and query the invoice you want to pay. :ou would see )mount paid as E.EE before you ma!e a payment.

Clic! )ctions button. (elect /Pay in full0 and clic! /#D0.

(elect the -an! )ccount and ,ocument. (ave the 3or!.

&ow that the payment is made, when you query for the invoice in Invoice window, you will the )mount Paid as F6,EEE.EE. Create )ccounting entries for payment. Clic! )ctions and select /Create )ccounting0

(elect the void chec!bo@ to cancel the payment. 'iew )ccounting .ntries: In the Payments window, query for the payment. $ools menuA'iew )ccounting

Pay ent Tables: )P4I&'#IC.4P):>.&$(4)++ )P4P):>.&$4(CH.,%+.(4)++ )P4CH.CD(4)++ )P4CH.CD4<#R>)$( )P4-)&D4)CC#%&$(4)++ )P4-)&D4-R)&CH.( )P4$.R>( :ou can also pay the invoices using Payment -atch screen. Refer to the article />a!e )P Payments through Payment -atches0

0)Trans1er to 2eneral 3edger:

&avigation: Payables Responsibility * 'iew Requests Run the concurrent program /Payables $ransfer to Beneral +edger0 with the required parameters.

4ournal * (ort: Refer to the )rticle /#rder to Cash Cycle0. Posting: Refer to the )rticle /#rder to Cash Cycle0.