Understanding SAP Procure To Pay Process (P2P) Scenarios

Table of Contents

Introduction: SAP Procure to Pay Process (P2P)

There will be moments when the intricacy and red tape of running a company seem insurmountable. Complexity increases in buy-to-pay (P2P) duties as a firm expands. Software developers specializing in enterprise resource planning have created methods to streamline and improve the usability of their products by automating and connecting P2P working elements. Read on to learn how P2P businesses may benefit from enterprise resource planning (ERP) software from industry heavyweights like SAP, Oracle, Microsoft, and Infor.

“P2P,” which stands for “Procure-to-Pay,” is an important part of managing the supply chain. Starting with requisitioning and ending with payment to the seller, the process is complicated. This piece will look at a lot of different parts of the peer-to-peer (P2P) method and how companies use SAP to handle their purchasing needs. What matters is that this ERP package helps you, whether you use it yourself or not. No matter if you use SAP yourself or are just interested in its many complex features, this article will give you a lot to think about.

Understanding Procure-to-Pay (P2P) Solutions

Procure-to-pay (P2P) is a fundamental business process that encompasses the full process of acquiring things or services, receiving them, accounting for them, and repaying them. Beginning with acquisition and finishing with final payments, P2P transactions should be considered a process rather than a technological solution. Specialized software designed specifically for P2P can significantly improve this cycle by managing billing, inventory management, and financial accounting tasks more effectively.

The Procure-to-Pay Process

Purchase Requisition (T-Code: ME51N)

The P2P process kicks off with a purchase requisition. In many organizations, the production department collaborates with the store’s department to assess stock availability. If materials are unavailable, a purchase requisition is generated. This step doesn’t involve accounting; it merely lists the required materials and quantities.

Purchase Order (T-Code: ME21N)

Once materials or services are needed, the purchasing department negotiates with vendors and creates purchase orders (POs). POs contain crucial information such as pricing, materials/services, quantities, delivery terms, and payment terms. Approval processes may be involved before issuing a PO. Like the purchase requisition, no accounting documents are generated during PO creation.

Goods Receipt (T-Code: MIGO)

Upon delivery of goods from the vendor, the warehouse department receives and verifies the received quantity. Goods Receipt (GR) is entered into the SAP system, generating material and accounting documents in the process.

Services Entry (T-Code: ML81N)

In addition to procuring materials, companies also procure various services. Services may be related to IT support, cleaning, or large-scale projects like SAP implementation. Service entry sheets are used to track services received. No accounting entry is created upon service entry; it must be released to generate an accounting document.

Invoice Receipt (T-Code: MIRO)

The accounts payable team receives invoices from vendors. A “3-way check” automatically verifies invoices against POs and GR documents for price and quantity accuracy. Invoices are often initially blocked for payment. Approved invoices are processed, resulting in material and accounting documents.

Vendor Payment (T-Codes: F-53/F110)

Vendor payments are made based on the due date of the invoice. The treasury department handles payments using F-53 (manual) or F-110 (automatic). This process generates a single accounting document in the FI module.

P2P process scenarios

Let’s explore some specific scenarios within the P2P process:

Standard (Stock) Purchase Order Process This scenario focuses on creating inventory purchase orders for materials bought in bulk and used internally. It includes steps for purchase order creation, goods receipt, invoice receipt, material report, and payment.

Capex (Capital Expenditure) Purchase Order Process This scenario illustrates how to create an asset purchase order. It involves creating assets in SAP, purchase order creation, goods receipt, invoice posting, and payment. Assets can be created either during PO creation or beforehand using AS01.

Consumption Purchase Order Companies often need to procure materials for specific purposes, and this scenario covers such scenarios. It includes purchase order creation, goods receipt, invoice receipt, material report, and payment.

Stock Purchase Order with Price Differences When prices change between order creation and invoice receipt, the handling of price differences becomes important. This scenario explains how to manage these differences when stocks are fully available, fully consumed, or partially consumed.

Service-Related Purchase Order and Price Differences In this scenario, we focus on service procurement and how price differences are handled in service-related POs. We explore purchase order creation, service entry, invoice receipt, vendor payment, and accounting entries.

Stock Transfer Process This scenario explains how to transfer stock between plants manually using MB1B or through a purchase order (ME21N). It includes stock transfer, goods receipts, accounting entries, and material report updates.

Down Payment against Purchase Order Many organizations make advance payments to vendors. This scenario covers creating purchase orders, processing down payments, goods receipts, invoice receipts, and vendor payments.

Scheduling Agreement Process PO Scheduling agreements are long-term agreements with predefined conditions. This scenario covers creating scheduling agreements, maintaining delivery schedules, goods receipts, invoice receipts, material reports, and payments.

Capex PO Using Internal Order In this scenario, we explore creating assets in SAP, internal order creation, purchase order creation using an internal order, goods receipt, invoice receipt, and controlling document reports.

Conclusion

The SAP Procure to Pay Process (P2P) provides detailed coverage of various procurement circumstances, each characterized by its own distinct features and variables that need to be taken into account. It is crucial to have a thorough understanding of these circumstances in order to effectively handle SAP procurement. This knowledge is essential for maintaining precise financial records and fostering favorable relationships with vendors. This essay provides a comprehensive explanation of the intricate mechanisms involved in procurement operations. It is beneficial for anybody, regardless of their familiarity with SAP.

In order for an organization’s procedures, from demand to payment, to be effective and transparent, procure-to-pay (P2P) is an essential component. Through the automation of all P2P processes and the provision of solutions to further improve them, SAP Ariba makes use of technology to increase the efficiency of the procurement process.

One of the best things about combined procure-to-pay suites is that they let you control your spending, which is made possible by collecting data. This helps CEOs keep a better eye on spending, streamlines buying, and makes smart choices about money.

You might also like the below articles.

Share on Facebook

Understanding SAP Procure to Pay Process (P2P) Scenarios

Introduction: SAP Procure to Pay Process (P2P)

Understanding Procure-to-Pay (P2P) Solutions