Procure To Pay(P2P) Process in Oracle Fusion

What is P2P?

The Procure to Pay cycle is vital to an organization as in this process the organization buys and receive goods or services from its vendors and makes necessary payments. Procure to Pay refers to recording the journey of transactions from requisitioning and procuring goods and services from suppliers to receiving them at their destination. The supplier invoices are raised for the purchases, and payments are recorded and reconciled against bank statement, concluding the process.

Though the Procure to Pay process originates in the Procurement business area, it is an integral and essential part of the payables business function as well. Starting from collating requisitions into the purchase order to the final payment against goods or services procured, both procurement and accounts payables team members have a keen interest in ensuring that every process is well optimized for savings, efficiency and building value.

P2P Process: Modules involved

Financials: AP, FA, CM, GL

SCM: INV, PO

Where is the Procure to Pay Process performed?

The P2P process spans across multiple departments within an organization. It starts with an employee in any department requesting goods or services or with the Manufacturing department creating demand on planned/actual orders. From there, it flows through Purchasing and then ends in the Payables Department. 

P2P Process Steps

• Create Requisition
• Approve Requisition(by approver)
• Request for Quotation(RFQ)
• Receive Quotations
• Quote Analysis(chose best quote)
• Create Purchase Order
• Approve Purchase Order
• Send PO to Supplier
• Receive Material from Supplier(GRN)
• Purchase Returns (if any)
• Check on hand quantity
• Creation of Payable Invoice with Match PO Lines
• Invoice Payment to Supplier
• Transfer to GL
• Reconciliation with Cash Management

Some Key Setups

• Assign Business Unit Business Functions for Procurement and Inventory
• Create Item Master Organization
• Create Inventory Organization
• Configure Procurement Business Functions (Purchasing Options in EBS)
• Configure Requisitioning Business Functions

• Setup Common Options for Payables and Procurement

• Setup Receiving Parameters (Receiving Options in EBS)
• Setup Procurement Agent
• Manage Buyer Assignment Rules
• Setup Account Rules (PO-TAB: Transaction Accounting Builder
• Map Account Rules to Account Types
• Assign TAB to Primary Ledger
• Create Sub Inventories
• Create Item Class
• Create Item

P2P Journal Entries

Purchase Requisition no JE

Request for Quotation no JE

We prepare a Purchase Order against best RFQ no JE

At Goods Receipt Note(GRN)

    Receiving Inventory A/c………Debit
              AP Accrual A/C………Credit 

When we are moving the Goods from Staging area to Sub-Inv or Delivery happens

    Material A/C..............Debit 
              Receiving Inventory A/C....Credit
While Creating the Invoice

    AP Accrual A/c………….Debit
              Liability(Supplier) A/c………Credit

While making payment to supplier

Liability(Supplier) A/C…………… Debit
              Cash Clearing A/c…………….Credit 

When reconciling

Cash Clearing A/C...................Debit
              Cash A/C............................Credit