P2P Cycle - SAP ERP

 

What does SAP stand for? (What is SAP full form?)

   Systems , Applications and Products in Data Processing . People often ask, “How do you say SAP?” It is an initialism, not an acronym, therefore, it is pronounced as individual letters (S-A-P). SAP is not pronounced as a word (“sap”). 

What is ERP software?

ERP stands for “enterprise resource planning.” ERP software includes programmes all core business areas, such as procurement, production, materials management, sales, marketing, finance, and human resources (HR).

SAP was one of the first companies to develop standard software for business solutions and continues to offer industry-leading ERP solutions.

Now P2P PROCESS IN SAP ERP  : 

P2P Stands for Procure to Pay.

Procure to Pay Cycle Consists following process : 

• Creating Purchase Requisition.

• Request for Quotation

• Quotation

• Creating Purchase order

• Goods Receipt Note

• Invoice Verification

• Vendor Payments

Purchase Requisition : 

 

A purchase requisition is an internal request to purchasing.  You ask the buyer to provide a certain quantity of a material or service on a certain date. A purchase requisition can be created automatically by Material Requirement Planning (MRP) or manually created. PR converts to RFQ, PO or outline agreement. Purchase Requisition forms include the following information

• Material Qty, description of goods & service and total value.
• Department Account number.
• Signature by an Authorized Department. 
• Attached Quote from the vendor.
• Delivery instructions.
• Attach Quote from the suggested vendor.

Request for Quotation : 

Requesting potential vendors to submit a quotation for a material or services.

Quotation : 

Quotation contains the vendor’s terms and conditions and constitutes the basis for vendor selection.

Purchase Order : 

  

Purchase Order  (PO) is a formal request to a vendor to supply certain materials or services under the certain conditions. A Purchase Order (PO) can be created with reference, or without reference to a purchase requisition, a request for quotation, or another purchase order.

POs usually specify terms of payment, incoterms, delivery date, specifications, material qty, price and reference or part numbers.

Types of purchase orders in procurement process:- Standard PO, Planned PO, Contract PO.

Goods Receipt Note : 

  Goods Receipt Invoice Process is one of the important process in procurement process cycle. It is matching the  goods that a company receives with the company PO (purchase order). It involves checking the goods are not damaged and fit for use, verifying the price, quantity, payment terms. Goods movement are entered in to the system with reference of Purchase order and goods receipt material documents are posted, automatically appropriate general ledgers are posted and stock accounts are updated.

Logistics Invoice Verification : 

 After GRIN process, next process of procurement to pay is invoice verification. It plays an important role in procurement process and Materials Management Module which performs the following tasks

• A Vendor Invoice can be created with reference to a Purchase Order, a Goods Receipt, a Delivery Note..
• Invoice is verified in-terms of prices, quantity,
• Necessary approvals by project managers

After verifying all the data, the invoice is posted and the data is saved in the system. The system updates the invoice data in Materials Management and Financial Accounting.

Vendor Payments : 

The last step in procurement process cycle is payment to vendors and it is also known procure to pay process. Vendors are get paid as per payment terms. In this fast technology world, comanies can pay through many methods to vendors.

Example : Net Banking , Cheque Payments etc.....