procure to pay

What is Procure to Pay(P2P) & Why P2P Process

Procure to pay (P2P) is a process to purchase receive and pay for goods which is required in our business. In which we identify the requirements, find the vendor which suites our requirements and process the purchase.

By procure to pay process save our cost and time both and brings efficiency in purchasing.


P2P Cycle in SAP
P2P Cycle in SAP

These are the following steps of procure to pay process:

Determination of Materials:

In this step we find our requirement for example we are producer of footwear and to produce footwear product we required different kinds of raw material like leather, sole, laces, buckle etc. and if we are traders of footwear, we will determine which footwear materials is in demand then further we will order of those demanded materials.

In following picture shows plant E001 required raw materials (Button, Thread) to production of shirts(Finished goods).

Determination of Materials.
procure to pay process

Purchase Requisition:

After determining of materials, we will generate the request for purchase to the management or responsible department.

In this following picture Purchase requisition send to purchase organization by plant E001. In SAP We use Transaction Code ME51N to create Purchase requisition.

Purchase requisition
procure to pay process

Purchase Requisition approval:

Purchase requisition will send to management for approval, if management or decisive team will find that requisition is actual required, they will approve the requisition and proceed for the further process.

Request for Quotation:

Purchase team after approval of purchase requisition process the requisition to find right quotation and ask their vendor to give quotation of required materials with there payment and shipping condition.

In the following picture Purchase organization EP01 request for quotation from Vendor-A, Vendor-B and Vendor-C for the required materials.

In SAP for create request for quotation we will use Transaction Code ME41.

Request for Quotation

Maintain Quotation:

After receiving quotation from all vendors, we process all quotation and compare the price and condition whichever is suit to our business we will proceed the selected quotation to further process.

In following picture after receiving quotation from all vendors, we will evaluate all vendor.

In SAP to maintain quotation we will use Transaction Code ME47, here as per client requirements we configure vendor on the basis of price, quality, delivery time etc. to select vendor.

Now we will compare the price of all vendors against requirement and select the reasonable vendor by using transaction code ME47.

Maintain Quotation
Price Comparision

Purchase Order:

After finalizing vendor and materials purchase team will generate the purchase order to selected vendor on quoted price by him.

In following picture shows selected and rejected vendors and placing the purchase order to selected vendor -A for Plant E001, material Thread and Button and send to Vendor -A.

In SAP we will created the purchase order by transaction code ME21N by entering header details like Purchasing organization, Purchasing group, company code, and vendor etc. and in item details like material number, quantity, plant, storage location and price.

Purchase order

Goods Receive:

Purchase order is generated, and we sent the copy of purchase order to that vendor now he well produces that product or trade and transported to our storage location or our shipping point which we give them in purchase order. And we will verify the quantity and quality, which product is passed in quality test we will receive it in our location, and which fail we make return invoices to that vendor.

In the following picture Material is received in plant E001 and vendor sends us the invoice.

In SAP we will use transaction code MIGO to received goods in selected plant or purchase order created by which plant.


Invoice Verification:

When we receive goods along with goods we will receive invoice, now we will verify invoice and generate the debit note if we returned any material. And processed the invoice for payment.

Accounts department will verify the invoice send by vendor in coordination with plant and purchase department.

In SAP we will use the Transaction code MIRO for invoicing.


Accounts Payable:

After all the processing purchase requisition to invoice verification management will process the payment to vendor.

After verifying the invoice by accounts department do the payment to vendor.


This is all about procure to pay process or cycle. In The next blog we will discusses about how to create all process step by step in SAP. For More Please Connect with us

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