P2P Or Procure To Pay Cycle in Oracle

P2P Or Procure to Pay, basically this term represent 1 very often used cycle in Oracle E Business Suit or even Oracle Fusion. So let’s see what this cycle actually is. Purpose of this post is to give a very high level idea of this very frequently used term called P2P

So next question: what do we do in P2P cycle?

Well, P2P cycle comes in the picture when you have to buy something. Let me elaborate a bit. Let’s say that you work in an organization and you need something, say a laptop. So you will raise a request for a laptop. This request is nothing but Requisition“. Now there are 2 possible outcomes. One is that your organization already has the laptop and they can allocate it to you. In which case it will become “Internal Requisition”, in which case you will be given the laptop from your organization itself and the cycle will end then and there itself.

But if your organization doesn’t have the laptop, in which they would go and buy it from a vendor. In this case, your requisition will get converted into a “Purchase Order“. Since your org ( From now onwards I’ll use the term for Organization) have to buy a laptop, they might issue a RFQ( Request for Quotes) or it might be so regularly bought item that they already have vendors to supply the laptops to the org.

In case of RFQ, your org will evaluate the many aspects like Delivery Date, quality, price and other terms and conditions to finalize the supplier and will place the order to the supplier. But in case when you already have a supplier listed to purchase the laptop, your org will send the laptop purchase order to the vendor. There are good chances that your org already has some kind of contracts (e.g BPA or CPA) with the supplier. Here BPA stands for “Blanket Purchase Agreement” and CPA stands for “Contract Purchase Agreement”.

(By the way, I was helped by this book a great deal in my Oracle database knowledge, just in case you want to refer it too.)

Upon receiving the Order, supplier will deliver the laptops to your org. Your org will inspect the laptops and receive the ones which are in good shape. You can return the laptops which are defective. Accepted laptops will go to either the inventory of your org ( more often than naught) or may come directly to you too if specified that way. So this ends the receiving part of an order.

Now the last part of the cycle and the most unpleasant one i.e. Paying. After all who likes to get away from ones “$”. Post delivery of the items, supplier will send you the invoice. You’ll store these invoices in your AP ( Account Payables) system. See the word “Payables”. It means you have to pay the money. After creating the invoices in the system, you can match either 2 ways or 3 ways. In 2 way match you see if invoiced quantity is same as PO quantity. In 3 way match you check if quantity invoiced is matching with PO as well as received quantity ( remember you did a quality check while receiving).

If price and quantity match, your invoice is good to be picked up and being paid. So depending on the terms of payments, system will pick the invoices and pay it using various methods like Check/ Wire etc.

Now if you look closely, Following are the main Oracle modules in the P2P Cycle:
1. Purchasing
2. Inventory
3. Account Payables (AP)

So this concludes the P2P Cycle. And gives you a high level view of the cycle. By no mean this post claims to give all the details of the cycle but just to give you a brief introduction of the cycle. Deeper you go, more details you will come to know.

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Reference:
support.oracle.com

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