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The "Procure to Pay Process" explained.

Procure to pay (P2P) is a business process that involves purchasing goods or services, receiving and approving invoices, and finally making payment to the supplier via an existing accounting system.

This process is an important part of a company's financial operations and can have a significant impact on its bottom line. In this article, we will explore the key steps involved in a typical P2P process, the benefits of implementing a P2P system, and some common challenges that organizations may face when managing their P2P processes.

The P2P Business Process

The steps in a typical Procure to Pay (P2P) business process are as follows:

    • Identify the need for goods or services and create a purchase requisition to initiate the procurement process.

    • Select suppliers and request quotes or proposals.

    • Evaluate the quotes or proposals and choose the most suitable supplier (if a 3-bid role has been invoked)

    • Create a requisition and send for approval.

    • Create a purchase order and send it to the chosen supplier.

    • Receive the goods or services from the supplier and verify that they meet the specified requirements.

    • Receive and review invoice from supplier for accuracy and compliance with the purchase order and contract.

    • Approve the invoice for payment.

    • Send approved payment to accounting system for payment.

Throughout this process, it is important to maintain proper documentation and record-keeping to ensure transparency and compliance with financial regulations.

Some P2P systems take over the actual payment process and some do not.

The best P2P systems do not take over the payment process since accounting systems have historically done, and still do, a great job at payment processing, which is standardized, but a poor job at procurement, which is not.

For this reason, the top P2P systems automate the purchasing, receiving, invoice pickup, invoice matching, and invoice approval processes, leaving final payment up to the accounting system already in place.

See Also

Procure To Pay Software, Purchase Order Invoice, Invoice Authorization Software, Invoice Matching