Procure-To-Pay Definition
Procure-to-pay (P2P) is the process that a company uses to purchase goods and services from suppliers. The P2P process begins when a company identifies a need for goods or services, and ends when the supplier is paid. In between, there are several steps that must be taken in order to complete the P2P process.
The first step in the procure-to-pay process is requisitioning. This is when a company creates a request for goods or services. The requisition may be created manually, or through an electronic system. Once the requisition is created, it is sent to the purchasing department.
The purchasing department then reviews the requisition and determines if it can be fulfilled internally or if it needs to be sourced externally. If the requisition can be fulfilled internally, the purchasing department will work with the appropriate department within the company to fulfill the requisition. If the requisition needs to be sourced externally, the purchasing department will issue a request for proposal (RFP) to potential suppliers.
Once proposals are received from potential suppliers, the purchasing department will review them and select a supplier based on factors such as price, quality, delivery time, etc. Once a supplier is selected, a purchase order (PO) is issued. The PO outlines what goods or services are being purchased, at what price, and by what date they need to be delivered.
The supplier then ships the goods or services to
