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P2P Process in Accounts Payable

The P2P process in accounts payable stands for the process of integrating purchasing and accounts payable systems. Procure-to-pay steps of the process include requisition, purchase order, receiving, reconciliation, and payment.

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What is Procure to Pay (P2P)?

Procure-to-pay (also known as purchase-to-pay or P2P) is the cycle in which businesses inquire, request, receive, and then pay for raw goods and services. P2P in accounting involves numerous steps including requisition, purchase order, receiving, reconciliation, and payment. Each step is digitally integrated to help to ensure payments and invoices are processed accurately and on time.

The procure to pay process involves managing the buying of goods and services, approvals, payments, and suppliers. Compliance may also be checked through a good procure-to-pay automation process. By integrating purchasing and accounts payable systems and digitizing them, a business can create a more efficient system overall for its accounts payable team.

A software solution like AvidPay for procure to pay can help your accounts payable team with bill payments, managing suppliers you need to make payments to, reducing errors by automating the process, and more. AvidXchange’s software platform can help middle-market companies save time, cut down on costs and resource consumption, and potentially even enable the quicker approval of new suppliers and invoices.

What is the P2P Process in Accounts Payable?

The P2P process in accounts payable is a critical part of your business’s financial management. It involves the entire cycle of purchasing goods or services from your suppliers to payment. The process starts with identifying the need for a product or service and creating a purchase order. Then, you receive the goods or services and match them with the purchase order and invoice. Finally, you make payment to the supplier based on the agreed-upon terms.

Nowadays, paying suppliers electronically is a more popular and efficient option compared to paying by check. Electronic payments can help you reduce costs and streamline the payment process. They also provide a more secure way to pay and help you avoid the risk of lost or stolen checks. Electronic payments can also provide greater visibility into your payment process and help you manage your cash flow more effectively.

Is P2P and Accounts Payable the Same?

While both P2P and AP are related to a business’ accounting processes, they are not the same. They are interconnected components of the overall procurement and payment process. To elaborate, P2P is a broader business process that encompasses the entire cycle from the procurement of goods or services to final payment. AP is a specific subset of the P2P process focusing on the management of the money a company owes to its suppliers or vendors. AP includes the receipt, processing, and payment of invoices.

In short, P2P is the entire process, while AP is a part of that process dealing specifically with the financial aspect of paying for goods and services. While related, procure-to-pay is a broader process that encompasses various stages, and accounts payable is a specific part of that process dealing with the payment of invoices.

Procure-To-Pay Process Steps

The P2P end-to-end process has several procure-to-pay process steps that need to be followed.

There are also certain procure-to-pay best practices that you may want to follow as you go through the procure-to-pay process steps in SAP. These best practices include keeping all data and processes transparent, improving relationships with your suppliers, and streamlining workflows, as well as using the right procure-to-pay software for your business.

It is important to use the right SAP transaction codes. A procurement or accounts payable department may want to look at a code testing checklist in order to make sure they’re testing the right SAP ERP transaction codes.

When looking at the different steps involved in the procure-to-pay process, you may see the SAP transaction activity of purchase orders. A purchase order is the formally agreed-upon document that is made from the customer to the vendor. This includes information such as intent to purchase, along with the finalized prices. Delivery dates and other specifications are usually also included in detail in the purchase order. The purchase order on the menu of SAP is categorized under the transaction code ME21N.

SAP Procure-To-Pay Process Flow Diagram

The SAP procure-to-pay process may also be called the external procurement process (ERP). If you take a look at a procure-to-pay process flow diagram, you may be able to get a better understanding of the P2P process in SAP MM.

The SAP procure-to-pay process P2P cycle steps include purchase requisitions. The purchase requisition is an internal document that is issued when goods or services are required. Basically, the creation of this purchase requisition announces that something needs to be purchased. After this, the SAP system will check automatically for things such as budget and other parameters. Additionally, an approval workflow may be needed. If there are changes that need to be made, the purchase requisition document can be edited.

If you search for a P2P process in SAP with T-codes, you may see codes such as ME21N for purchase order and MIGO for goods receipt. This is because different transaction codes are associated with different transaction activities.

Depending on whether your business is purchasing goods or services, your procure-to-pay management team would either perform a service entry or a goods entry through SAP next. These confirmations are then routed via a workflow to the necessary parties whose final approval is needed before the payment is finally made.

Purchase Order To Payment Process

There are procure-to-pay best practices that a business might want to take note of during the entire purchase order to payment process or SAP procurement process.

The procurement process in SAP includes steps such as purchase requisition, purchase order, contact release order, goods receipt or service entry, and the management of invoices.

With the help of bill payment and invoice management automation software, the purchase order to payment process, which is also called the procure-to-pay process, may be streamlined and made more efficient. Using a digitalized procure-to-pay system can potentially reduce the time your accounts payable department needs to spend on such procure-to-pay processes. This can also reduce costs associated with these processes.

AvidPay is a bill payment software that may be able to help your business make 100 percent of your bill payments electronically. With tons of integrations and a huge supplier network of more than 825,000, the AvidPay software suite may be able to help your business immensely.

AvidPay allows you to create custom workflows anytime, anywhere. The added convenience and visibility can be very helpful for accounts payable teams that want more control over their payment statuses and approvals.

Saying goodbye to paper bill payments means reducing costs that are associated with traditional bill payment and management. Cutting down on postage and printing related costs can go a long way for a middle- or large-market business. Not only can you save on paper and supplies, but you can save time by no longer completing the act of physically mailing invoices. By using AvidXchange’s AP software solutions, you can also reduce the time your team previously spent following up on invalid checks and unapproved invoices.

P2P Cycle

The procure-to-pay (or purchase-to-pay) cycle, often called the P2P cycle in accounts payable, is the P2P cycle process in which businesses inquire, request, receive, and then pay for raw goods and services.

You may be wondering how to explain P2P cycle or, more specifically, you may be searching the internet for “the P2P process in SAP with T-codes (transaction codes)”. The procure-to-pay process SAP MM can be explained in many SAP procure-to-pay process flow PPT (PowerPoint presentations).

In a procure-to-pay process, the different transaction activities, such as purchase orders and invoicing, are executed using transaction codes in SAP. When understanding the P2P cycle in SAP and learning how to go through each transaction activity, a procurement department may have all the SAP transaction codes memorized.

P2P Process in SAP

For your business’ convenience and maximum efficiency gains, AvidXchange has created more than 225 integrations between AvidPay and other widely used accounting systems. This means that your current system does not necessarily need to be disturbed for your existing processes to be streamlined. If you use a popular business accounting system—or plan on using one—AvidXchange may already have built an integration with that very system.

AvidPay from AvidXchange integrates with Concur Invoice in order to provide a payment automation solution for middle-market businesses that want to automate their bill payment processes. AvidXchange is also an SAP Concur Partner.

This payment automation solution is built in order to help businesses eliminate inefficient payment processes and improve the P2P process in SAP. This solution can help your business pay bills more easily, and the entire process of the P2P cycle in accounts payable may be made more efficient.

The procure-to-pay process SAP has several scenarios involved in it. This procure-to-pay cycle in SAP has transaction activities such as the purchase requisition, purchase order, and goods receipt, as well as handling of posting.

The P2P process in SAP accounting entries can be very important for a business. The procure-to-pay process flow, when streamlined and digitized can become far more efficient than a typical SAP procure-to-pay process that often requires more manual management.

The SAP P2P process is a critical part of many middle-market companies. Using a software solution to automate the procure-to-pay process may pose great benefits to a business that wants to run more efficiently.

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