SAP ARIBA P2P Flow

Updated: Mar 13


ARIBA P2P Flow

Effective P2P Processes


Most of the organizations are still using manual or semi digital tools to manage their procure- to- pay- cycle. Most of the organizations are using the procurement module integrated with their ERP or Accounting software. Company need to move away from traditional approach and should adopt right procurement technology. P2P software manage an effective procure to pay process.


What is a P2P processes?

Procure to pay process is the perform coordinated and integrated action to fulfill the requirement of goods and services in time with appropriate pricing negotiation. In P2P process involves number of sequential steps are involve in requirement identification to invoice approval and vendor payment. All steps in P2P flow need to be executed strict order.

The P2P Process flow

Procurement professional use most relevant stages of P2P process based on the organization needs. Here are nine logical steps of an ideal P2P process.


· Step-1 Requirement Identification

· Step-2 Create Requisition

· Step-3 Approval Process of Requisition

· Step-4 Create Purchase Order

· Step-5 Approval Process of Purchase Order

· Step-6 Goods Receipt

· Step-7 Supplier Performance

· Step-8 Invoice Approval

· Step-9 Vendor Payment


Step-1 Requirement Identification


The first step of P2P process is to determine and define the business requirements with the help of cross-functional stake holders. As we received a valid requirement of goods or services, procurement teams prepare a high level specification for goods/services and terms of reference (TOR) for services, and statement of work (SOW).


Step-2 Create Requisition


After preparation of goods or services specification, a formal purchase requisition is created. The requester submitted a purchase requisition. A PR can be creating for any type of procurement for example, from standard purchases to subcontracts and consignments.

Step-3 Approval Process of Requisition


All submitted requisition are then reviewed by heads of department or procurement officers. Approvers can approve or reject a PR after evaluating the need, after verifying the available budget, validation of PR form. Incomplete PRS are rejected back for corrections or resubmission.


Step-4 Create a Purchase Order


If the requested goods/ services are having characteristics such as unmanaged category buy, one time unique characteristics or low value commodities, then a spot buy can be performed. Else a Purchase orders are created with reference to approved purchase requisitions.


Step-5 Approval Process of Purchase Orders


The Purchase orders now move through a approval process to ensure the legitimacy and accuracy of specifications. Approved purchase orders are then dispatched to vendors. After reviewing the purchase order vendors can either approve, reject, or start a negotiation. When a officer approve a purchase order, a legally binding contract is activated.

Step-6 Goods Receipt

As supplier delivers the promised goods/ services, the buyer inspects the delivered products or services to ensure that it complies with the specifications and terms. The goods receipt is then approved or rejected based on standards specified in the purchasing contract or purchase order.

Step-7 Suppler Performance


Based on the data obtained from goods receipt step, the supplier performance is evaluated. Valuation of Suppler Performance is done based on quality of goods/ services, on-time delivery, service, contract compliance, responsiveness, and total cost of ownership (TCO). Non performance is flagged in existing rosters and information system for future reference.


Step-8 Invoice Approval


As goods receipt is approved, a three way verification makes between purchase order, vendor invoice, and the goods receipt is performed. In case of no discrepancies found, the invoice is approved and forwarded to finance department for final payment disbursement. In case of any inaccuracies, the invoice is rejected back to the vendor with a reason for rejection.

Step-9 Vendor Payment


After receiving a approved invoice, the finance department will process for payments according to the contract terms. Any contract changes or review liquidated financial security will be taken into account. A payment made to a suppler will fall into one of the following five types: advance, partial, progress or installment, final, holdback/ retention payments.

Rajesh Sharma

SAP MM/EWM Functional Consultant

Linked in Profile: https://www.linkedin.com/in/rajesh-sharma-3a565821/


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