Scribd
Upload
9K views5 pages

Procure To Pay (P2P) Process of SAP MM

The procurement process begins with a purchase requisition and ends with payment to the vendor, known as the procure-to-pay (P2P) cycle. The P2P cycle involves identifying requirements, selecting vendors through a request for quotation (RFQ) process, issuing a purchase order, receiving goods via a goods receipt, and processing vendor invoices for payment. The standard SAP system facilitates this process through various transaction codes and performs a three-way match of the purchase order, goods receipt, and invoice for accuracy and payment.

Uploaded by

Swapnil Kamble
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
9K views5 pages

Procure To Pay (P2P) Process of SAP MM

The procurement process begins with a purchase requisition and ends with payment to the vendor, known as the procure-to-pay (P2P) cycle. The P2P cycle involves identifying requirements, selecting vendors through a request for quotation (RFQ) process, issuing a purchase order, receiving goods via a goods receipt, and processing vendor invoices for payment. The standard SAP system facilitates this process through various transaction codes and performs a three-way match of the purchase order, goods receipt, and invoice for accuracy and payment.

Uploaded by

Swapnil Kamble
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 5

Procure To Pay Cycle

The procurement process starts from purchase requisition and ends with
payment to the vendor. Hence this process is popular with the word ‘P2P’
Process. It deals with procuring materials, services, different contracts
associated with procurement. It is a 3-way matching rule (PO-GR-IV). We will
understand the master data activities like a material master, purchase Info
record, source list, and transaction activities like Purchase Requisition,
Purchase Order, Goods Receipt, and Invoice Posting.

Satish Kaygude [email protected] 7020210837


What is Procure to Pay Cycle in SAP & Why P2P Cycle in
SAP

Procure to pay (P2P) is a process to purchase receive and pay for goods
which is required in our business. In which we identify the requirements,
find the vendor which suites our requirements and Process the Purchase. By
procure to pay process save our cost and time both and brings efficiency in
purchasing.

Satish Kaygude [email protected] 7020210837


1. Purchase requisition: (T-Code - ME51N)
It is an internal document and raised by the stores department to the
Purchase department internally.

Procurement in every organization starts with gathering requirements.


Once requirements are gathered, we need to inform the purchasing
organization. A purchase requirement is a document that contains a list of
requirements. A Purchase requisition is a request that is made to the
purchasing organization to procure a certain list of materials.

2. Purchase Requisition approval: (T-Code - ME54N)


Purchase requisition will send to management for approval, if management
or decisive team will find that requisition is actual required, they will
approve the requisition and proceed for the further process.

3. REQUEST FOR QUOTATION: (T-Code - ME41)


Vendor selection is an important process in the procurement cycle. Once
requirements are gathered, we start looking for possible suppliers who can
fulfill the requirements at the best possible price. So, a request is made to
the vendors to submit their quotations indicating the price of material along
with their terms and conditions. This request is known as the request for
quotation (RFQ).

4. Maintain Quotation: (T-Code - ME47)


After receiving quotation from all vendors, we process all quotation and
compare the price and condition whichever is suit to our business we will
proceed the selected quotation to further process.
In following picture after receiving quotation from all vendors, we will
evaluate all vendor.

Satish Kaygude [email protected] 7020210837


In SAP to maintain quotation we will use Transaction Code ME47, here as per
client requirements we configure vendor on the basis of price, quality,
delivery time etc. to select vendor.
Now we will compare the price of all vendors against requirement and select
the reasonable vendor by using transaction code ME47.

5. Purchase Order: (T-Code- ME21N)


The Purchasing department will negotiate the required materials/services
with the external vendors, and they will finalize the vendor. The purchase
order will be raised by Purchasing Department to the vendor with the agreed
price, materials/services, quantity, delivery terms, and payment terms. This
kind of information we can find in the Purchase order. If there is any release
process (Approval Process) for a Purchase order, we need to get the
approvals first before issuing PO to the vendor.

6. Goods Receipt: (T-Code- MIGO)


The warehouse department receives the goods from the vendor as per
delivery terms. Warehouse department enters Goods Receipt against the
Purchase Order in the SAP system. They simply verify the stock and enter the
delivered quantity while posting Goods Receipt. In this process, the system
will generate two documents – Material document in MM and accounting
document in FI.

Accounting Entry for MIGO

Account Description Currency DR CR


BSX- Stock / Inventory GL Account INR 1000
WRX – GR/IR Clearing Account INR 1000

Satish Kaygude [email protected] 7020210837


7. Invoice receipt: (T-Code – MIRO)
The accounting Payable team receives the invoices from the vendor. At this
stage, a “3-way check will be performed by the standard system
automatically. The invoices will be verified automatically against Purchase
Order and the Goods Receipt document for the correct price and quantity.

Accounting Entry for MIRO

Account Description Currency DR CR


WRX – GR/IR Clearing Account INR 1000
KBS – Vendor Account INR 1000

SAP MM Accounting Entries:

Satish Kaygude [email protected] 7020210837

You might also like