Procure to Pay: is an integral part of any business. Businesses need to procure material and or services, this procurement can be in-house (internal) or from external source. In this session we will be taking a look at external procurement.
The procurement process cycle is triggered by requirements either from MRP or Request of the material or service from a business process, followed by vendor selection, purchase order, receipt of goods, vendor payment.
Purchase Orders (PO)
Purchase Order is a
legal and confirmed document between the organization and the vendor or
supplier for procurement of material and or services. The document contains the
vendor information, material or service required, quantity, price per unit,
date of delivery.
Goods
Receipt (GR)
Based on
Purchase Order, the goods shipped by vendor ships are recorded in the system
and the process is termed as goods receipt (GR).
When goods
receipts are posted against a purchase order, the quantity & value of
inventory is affected and at the same time a liability towards the vendor is
created.
Invoice Verification & Vendor Payment
On receipt of goods against a purchase order, the vendor presents an invoice for payment of delivery of goods or services rendered. The invoice received is posted in the system and on verification of the invoice against the purchase order, accounts payable will release the payment to vendor.
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