Professional Documents
Culture Documents
In this article, we will see the steps involved in Procure to Pay Cycle. Here is the diagrammatic representation:
1) Create Requisition:
Requisition is nothing but a formal request to buy something (like Inventory material, office supplies etc) needed for the enterprise. Only an employee can create one. There are two types of requisitions:
Internal Requisition: Internal requisitions provide the mechanism for requesting and transferring material
from one inventory to other inventory.
Purchase requisition: Unlike Internal requisitions, Purchase requisitions are used for requesting material
from suppliers.
Navigation:
Choose the requisition type and enter the Item, quantity, Price details in the Lines tab.
Save the work. The status of the requisition will now be Incomplete. And now the Approve button is highlighted. The requisition needs to be approved first before proceeding further by the concerned authority. Submit this requisition for Approval by clicking on the Approve button. The status will now be updated to In Process .The workflow then will send an Approval notification to the concerned person (derived based on hierarchy usedPosition or Supervisor hierarchy) using which he can Approve or Reject the requisition.
At any time the status of requisition can be checked using the Requisition summary window.
Navigation:
We can also check the Action History of requisition (it will show details about who has submitted, approved and cancelled the requisitions)
as below:
Navigation:
Underlying Tables:
PO_REQUISITION_HEADERS_ALL
PO_REQUISITION_LINES_ALL
PO_REQ_DISTRIBUTIONS_ALL
2. Planned PO: A Planned PO is a longterm agreement committing to buy items or services from a single source. You must specify tentative delivery schedules and all details for goods or services that you want to buy, including charge account, quantities, and estimated cost.
3. Blanket agreement: A Blanket PO is created when you know the detail of the goods or services you plan to buy from a specific supplier in a period, but you do not know the detail of your delivery schedules.
4. Contract agreement: Contract purchase agreements are created with your suppliers to agree
on specific terms and conditions without indicating the goods and services that you will be purchasing
Choose type as Standard Purchase Order. Enter the Supplier, Buyer. In the Lines tab, specify the line number, line type, Item, quantity, price etc.
Click Terms to enter terms, conditions, and control information for purchase orders.
Click Currency button to enter and change currency information for purchase orders, RFQs, and quotations.
Click Shipments button to enter multiple shipments for standard and planned purchase order lines Purchase order shipment specifies the quantity, shipto organization and location, date you want your supplier to deliver the items on a purchase order line, and country of origin for the items. When you save, Purchasing creates distributions depending on the default information available.
Enter the Receipt Close Tolerance percent, Invoice Close Tolerance percent to set the receiving and invoice close point.
TwoWay: Purchase order and invoice quantities must match within tolerance before the
ThreeWay: Purchase order, receipt, and invoice quantities must match within tolerance
FourWay: Purchase order, receipt, accepted, and invoice quantities must match within
Purchase Order: Payables must match the invoice to the purchase order.
Click the Receiving Controls button to enter receiving control information for purchase orders.
- Enter the maximum acceptable number of Days Early and Days Late for receipts.
- Enter the maximum acceptable overreceipt Tolerance percent (receipts that exceed the
- Select Allow Substitute Receipts to indicate that receivers can receive substitute items in place
of ordered items.
- Enter the default Receipt Routing that you assign goods: Direct Delivery, Inspection Required,
or Standard Receipt.
- Enter the Enforce Ship To location option to determine whether the receiving location must be
Select more tab to enter more details and the requisition number (optional).
Underlying Tables:
PO_HEADERS_ALL
PO_LINES_ALL
PO_DISTRIBUTIONS_ALL (REQ_HEADER_REFERENCE_NUM in Distributions table is the Requisition number for this PO)
3)Create Receipt:
Navigation:
ReceivingReceipts
RCV_SHIPMENT_HEADERS
Navigation:
Click the Match button to match to either Purchase Order or Receipt (depending on the Invoice Match option specified on the PO) and avoid manually entering the invoice.
Click on Distribute button to navigate to the Match to Purchase Order Distributions window.
This creates the invoice and you can see the status of the invoice as Never Validated. it has to be Validated and Accounted before you can pay it.
Now you can see the status of the invoice as Validated, if there are no issues during validation.
Invoice Tables:
AP_INVOICES_ALL
AP_INVOICE_DISTRIBUTIONS_ALL
AP_ACCOUNTING_EVENTS_ALL
AP_AE_HEADERS_ALL
AP_AE_LINES_ALL
5)Making a Payment:
Go to the Invoice window and query the invoice you want to pay. You would see Amount paid as 0.00 before you make a payment.
Now that the payment is made, when you query for the invoice in Invoice window, you will the Amount Paid as $4,000.00.
Payment Tables:
AP_INVOICE_PAYMENTS_ALL
AP_PAYMENT_SCHEDULES_ALL
AP_CHECKS_ALL
AP_CHECK_FORMATS
AP_BANK_ACCOUNTS_ALL
AP_BANK_BRANCHES
AP_TERMS
You can also pay the invoices using Payment Batch screen. Refer to the article Make AP Payments
Navigation:
Run the concurrent program Payables Transfer to General Ledger with the required parameters.
++++++++++++++++++