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What is procure to pay in accounts payable?
The procure-to-pay process - also known as the P2P cycle - involves the entire workflow within procurement that begins at need identification and ends at payment disbursement. This process goes in the following manner:
As a team identifies the need for goods or services in a project, it raises a Purchase Requisition (PR) and forwards it for approval. If the relevant authority approves it, the procurement department generates a Purchase Order (PO) and routes it for approval before sending it to the vendor. As the goods are received, a receiving officer records a Goods Receipt Note (GRN) about the products’ quantity and condition. The procurement team records the supplier’s performance through KPIs. AP personnel then perform three-way matching between the PO, GRN, , and the vendor’s invoice. Once the invoice is approved, the AP team dispatches the payment to the supplier.
Instead of following a fragmented approach, this coordinated process integrates purchasing and accounts payable systems. Organizations can automate the entire procure-to-pay process by using procure-to-pay software.