Purchase-To-Pay Cycle (P2P)

P2P is the process that a company uses to purchase goods and services from suppliers and ultimately pay for them. The cycle begins when a company places an order with a supplier and ends when the company pays the supplier for the goods or services. In between, there are a number of steps that must be completed in order to ensure that the purchase is made and paid for in a timely and efficient manner.

The first step in the P2P cycle is procurement, which is the process of identifying and acquiring the goods or services that a company needs. This can be done internally, by working with existing suppliers, or externally, by soliciting bids from new suppliers. Once the goods or services have been procured, they need to be received and inspected to ensure that they meet quality standards.

The next step is invoicing, which is when the supplier sends an invoice to the company for the goods or services that were purchased. The invoice should include all relevant information such as the quantity of goods or services purchased, the price per unit, any discounts that were applied, and the total amount due.

Once the invoice has been received, it must be approved for payment. This approval process can vary from company to company, but typically involves verifying that the invoice is accurate and authorizing payment. Once payment has been authorized, it can be made via check, wire transfer, or credit card. Finally, once payment has been made, the P2P cycle is complete.