Procure to Pay:

Procure to pay is the process of obtaining and managing the raw materials needed for
manufacturing a product or providing a service. It involves the transactional flow of data that is
sent to a supplier as well as the data that surrounds the fulfillment of the actual order and
payment for the product or service.
Procure to Pay Business Process Steps
1. Create Purchase Requisition - ME51 (Fields: Material/Plant/Quantity/Storage Location)
2. Create Purchase Order - ME21N. (Purchasing org/ Purchasing group/ Company Code/
Payment Terms/ Vendor/ Currency /Material/ Quantity/ Plant/ Inco terms/ Net Price/ Tax code/
Storage Location)
3. Goods receipt Purchase order MIGO (Enter PO No:/ Goods receipt Purchase order - screen
will display/save/ Material document posted will display)
4. Enter Invoice MIRO (Company Code/ Invoice date/ Reference-PO/ Amount/ Baseline Dt.)
5. Evaluated Receipt Settlement (ERS) with Logistics Invoice Verification MRRL (Company
code/ Plant/ Goods receipt document/ Fiscal year, goods receipt/Vendor/ Purchasing Document)
6. Automatic Clearing without Definition of Clearing Currency F.13 (Company code/ Fiscal
year/ Document number/ Posting date/ Check Select vendors)
7. Automatic Clearing with Definition of Clearing Currency - F13E (same as above)
8. Clear G/L Account F-03 (Account/ Company code/ Currency/ Select the required documententer Pstky, Account, Amount, Profit center)
9. Automatic Payment - F110 (parameter tab - Posting date/ Document date/ Company code/
Payment method/ next payment date/ Vendor)

Procurement Process Cycle:

Procure to Pay process consists of

Material Requirement Planning

Vendor Selection
Request for Quotation
Purchase Requisition
Purchase Order
Goods Receipt
Goods Receipt Invoice
Invoice verification
Payment to vendors

Why SAP ERP Procure to Pay?

To gain an edge, you need to accelerate and automate your procurement processes, proactively
ensure compliance, and find new ways to cut costs. With SAP ERP Procure to Pay software you
can:

1. Simplify basic procure-to-pay processes from requisitioning to e-invoicing

2. Reduce costs by optimizing inventory levels and consolidating shipments
3. Improve supplier management and maintain high levels of supplier and customer satisfaction
Product Capabilities:
Key capabilities of SAP ERP Procure to Pay:
Sourcing and Contract Management
Streamline sourcing and contract management on a platform that can keep up with change and
adapt to your needs.

Identify opportunities for savings and efficiently manage the contract lifecycle
Tightly integrate sourcing and contract management processes
Develop a standardized contract-authoring process that meets your companys needs

Operational Procurement
Accelerate and automate your procurement processes, proactively ensure compliance, and find
new ways to cut costs.

Improve insight into spending performance and identify opportunities for savings
Streamline your spend analysis, source-to-contract, and procure-to-pay processes
Gain 360 degree visibility into supplier relationships, performance, and risks

Inventory and Warehouse Management

Integrate your procurement process with resource planning to optimize inventory levels and
minimize unused space.

Speed up the procurement process with intuitive user interfaces

Improve catalog management and simplify the purchase of goods and services
Increase transparency across end-to-end outbound logistics to accelerate material flow

Invoice and Payables Management

Fine-tune invoice and payables management and automate data extraction to eliminate data
entry errors and duplications.

Enhance your invoice management and accounts payable processes

Integrate all accounts payable data with your purchasing system

Accelerate invoice processing and streamline your payables options

SAP R/3 Procurement to Pay:

Table of Contents
This audit program for SAP contains 63 tests designed to evaluate adequacy of the key
configuration settings, monitoring techniques and access restriction mechanisms to sensitive
transactions in the SAP R/3. The control framework covers the following components of the
procurement/expenditures business process:
Purchasing
Audit guidelines to determine if purchase orders are entered accurately in SAP R/3 and (if
purchasing function has been established) only placed for approved purchase requisitions:

Access to maintain purchase orders, purchase requisitions and outline agreements

Source list maintenance for specified materials
SAP R/3 release strategy for POs & purchase requisitions
System edits for purchase requisitions, POs, outline agreements, & payment transactions
Tolerances and posting rules for price variance - PO versus Receipt
Tolerances/posting rules for PO/Invoice price and quantity variances (Invoice versus PO)
Goods received invoice verification and GR-based invoice verification
System edits for purchasing documents - doc. type, posting keys, tolerance groups, etc.

Processing Accounts Payable

Audit guidance and testing procedures to ensure that amounts posted to the A/P represent
goods/services received, accurately calculated and recorded in SAP R/3:

Access to maintain credit notes, invoices, credit memos, & recurring payments
Exchange rate table, rounding units, foreign currency ratios
The Goods receipt/Invoice receipt (GR/IR) account
Vendor pricing information and more.

Processing Disbursements
Controls and testing procedures to ensure that disbursements are made for goods/ services
received, accurately calculated, recorded in SAP R/3, and distributed to the appropriate suppliers:

Editing payment run parameters & proposals, executing payment runs

Access to unblock vendors, release blocked invoices
Alternative payee, one time vendor functions
Edits/validations of the payment and order entry transactions and much more.

Maintaining Supplier and/or Vendor Master Files

Controls and testing guidance to ensure validity, accuracy, and timeliness of changes to the
vendor master files in SAP R/3:

Access to maintain vendor master records

Segregation/separation of duties within SAP R/3 expenditure functions
Monitoring changes to vendor master data and more.

Everything has been conveniently pre-documented with fill-in fields for company-specific
information (entity name, date, data extracted from the system, etc.) which will allow you to
proceed with your assessment immediately.

Accounts Payable / Procure to Pay (P2P) Process Overview

The Accounts Payable / Procure to Pay (P2P) overall process covers the complete cycle from
Vendor Master Maintenance through procurement and Vendor Invoice Processing, the resulting
Payment Processing to external vendors and the Period Closing Activities. All processes are
accompanied by comprehensive and mature monitoring to accomplish Sarbanes-Oxley
Act (SOX) Compliance.

The Procure to Pay sub-processes covering Fixed Asset setup, capitalization and administration
are not included in this process view.
Assumption for an effective P2P process:
The P2P process assumes that the following SAP modules are in place:
FI, AM, MM, PM (optionally for equipment master records).
The described Invoice Processing is designed as an SAP Business Workflow/SAP Webflow
process including Optical Archiving for all incoming documents. Therefore a scanning and
optical archiving infrastructure needs to be in place to support the workflow functionality. The
optical archive storage system needs to fulfill legal and tax requirements to enable the storage of
'original
documents'.
Accounts payable /P2P Process interfaces at SAP's SSC

It is interesting to see how different companies approach their AP process. The most common is a
partially decentralized processing of AP, as it has developed over time. This works as follows:
companies keep invoices at the local subsidiaries and only the financial data get passed over to
the SSC for processing. In order to minimize the administrative effort of transferring paper
invoices into electronic formats, more advanced companies have centralized the AP processing
completely. In this case invoices are sent to the SSC.
Below there is an example of the typical process cut for the AP/P2P process, with the SSC
Interfaces for the SAP SSC:

As a prerequisite, a purchase order needs to be issued before actual purchases are made. This
system entry allows an easier tracking of incoming invoices and allows an efficient approval
process. When goods arrive, a receiving clerk begins the process of quality and quantity check to
assure that the goods delivered match the items and quantities on the invoice. The invoice is
scanned to be available electronically in the system.