Procure to pay process ppt
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The document describes the key steps in a company's procure to pay process. It includes: 1) Material requirement planning to determine needed supplies and when. 2) Vendor selection by comparing quotations. 3) Purchase requisitions, purchase orders, goods receipt, and goods receipt invoicing to receive ordered items. 4) Invoice verification to check prices, quantities, and approvals. 5) Payment to vendors according to terms after all verification is complete. The procure to pay process aims to efficiently obtain necessary items at the right time and cost while ensuring accurate payment for goods and services received.
Procure to pay process ppt
- 1. Procure to Pay Process Presentation by Anand.M (Emp.ID : 908)
- 2. Procure to Pay Every Organisation that Operates a business has to Purchase materials such as raw materials, Services etc. The Procurement process has become part of today's efficient bussiness operation. The Company can procure those materials as in-house production or External Procurement.
- 3. Procurement Process Cycle Procure to Pay Process consists the following Processes. Material requirement planning Vendor Selection Request for Quotation Purchase requisition Purchase Order Goods receipt Goods Receipt Invoice Invoice Verification Payment to Vendors
- 4. Material Requirement planning Material requirement planning(MRP) refers to the technique of using a projected manufacturing production schedule to figure out what supplied materials you will need, and when you will need them. Materials requirement planning carried out by MRP Controller in Production department.
- 5. Vendor Selection Vendor selection is one of the important step in procurement process. With the help of obtained quotation from sources and by comparing them, Vendors are slected.
- 6. Request for Quotation Requesting potential vendors to submit a quotation for material or services. Quotation contains the vendor's terms and conditions and consitutes the basis for vendor selection
- 7. Purchase requisition A purchase requisition is an internal request to purchasing. You ask the buyer to provide a certain quantity of a material or service on certain date. A purchase requisition can be created automatically by Material Requirement Planning (MRP) or Manually created. PR converts to RFQ, PO or outline agreement. Purchase requisition forms include the following information Material quantity, Description of goods & services and total value. Department Account number Signature by an authorized department. Delivery instructions. Attach quote from the Suggested Vendor.
- 8. Purchase Order Purchase order is a formal request to a vendor to supply certain materials or service under the certain conditions. A purchase order can be created with reference, or without reference to a purchase requisition, a request for quotation, or another purchase order. POs usually specify terms of payment, Incoterms, delivery date, specifications, material quantity, price and reference or part numbers. Types of Purchase orders in Procurement process: Standard PO Contract PO Blanket PO Planned PO
- 9. Standard PO Standard Purchase Order It is the most basic and widely used among different types of purchase orders, it is created when a buyer is sure about the order details such as the item, price, delivery schedule, payment terms etc. Example – Unreal corp. decides to buy 50,000 x 9W led bulbs from GE for a unit price of 10 each to be delivered within 60 days of order date. In such case, Unreal corp. will raise a standard PO and send it to GE for acceptance
- 10. Contract PO Contract Purchase Order It is created for a set period of time (often for a year) the item, pricing, quantity etc. can’t be anticipated precisely. In this case, a contract purchase order can be raised by the buyer, which upon acceptance becomes a legal contract. During contract period the buyer can raise a standard PO with specifications of requirements and request for goods. Example – Unreal Corp. analyzes and concludes that it often requires led bulbs of different wattage around different times of the year, however, the requirement is irregular and can’t be anticipated. In this case Unreal corp. can raise a contract purchase order.
- 11. Blanket PO Blanket Purchase Order It is used in cases where the item is known, but quantity and required delivery schedules are unknown. There can be numerous delivery dates against a blanket PO, they are often used in case of large quantities with exceptional discounts. Example – Unreal corp. decides to buy 5,00,000 x 9W led bulbs each year but they are not sure about the delivery schedule & quantity of each release. In such a situation Unreal corp. will raise a blanket purchase order.
- 12. Planned PO Planned Purchase Order It is used for a planned purchase anticipated for long- term where the delivery schedule is not known in advance. The dates of delivery can only be anticipated therefore only tentative dates are provided to the seller. Item, pricing and quantity are however known in advance. Example – Unreal Corp. has evaluated that it will have a long-term need for the next 5 years to buy 25,000 x 11W led bulbs each year. Instead of raising a standard PO each time Unreal Corp. can create a planned purchase order
- 13. Goods Receipt Goods Receipts is created to reflect the Goods Receipts for the specified material ordered from a vendor using Purchase Order process. After receiving the goods the company can record the following information, this information can be used for accounting, stock check and rotation, return any goods if there is problem What goods were delivered, Which vendor delivered the goods. Who, how, when goods were delivered and received the goods.
- 14. Goods Receipt Invocie Goods Receipt Invocie (GRIN) process is one of the most important process in procurement process cycle. It is matching the goods are not damaged and fit for use, verifying the price, quantity, payment terms. Goods movement are entered in to the system with reference of purchase order and goods receipt material documents are posted, automatically appropriate general ledger are posted and stock accounts are updated.
- 15. Invoice Verification After GRIN process, next process of procurement to pay is invoice verification. It plays an important role in procurement process and material management module which performs the following tasks A vendor invoice can be created with reference to a Purchase Order, a Goods receipt, a Delivery Note. Invoice is verified in terms of prices, Quantity, Necessary approvals by project managers After verifying all the data, the invoice is posted and the data is saved in the system. The system updates the invoice data in Materials Management and Financial Accounting.
- 16. Payment to Vendors The last step in procurement process cycle is payment to vendors it is also known procure to pay process. Vendors are get paid asper Payment terms. In this fast technology world, Companies can pay through many methods to vendors. For example - through net banking, Cheque payment etc.
- 17. Thank You