Purchase to Pay Process Overview

One essential business process is the purchase of goods that will be presented hereas the complex process Purchase to Pay in order to explain the most inportanttransactions in Accounting.

Purchase order handling: When you create purchase orders, the system providesyou with tools to help you enter the data. The required entry data such as supplier,material, plant and other data relevant to the organization of purchasing must beprovided. The purchaser can supervise the processing status of the order in thesystem. He can define, for example, whether a goods receipt or an invoice hasbeen executed for the respective order position. The system also supports dunning.This procedure runs exclusively in Materials Management. No postings are madein Financial Accounting.
When goods are received, the system checks, among other things, the quantityof goods received against the order quantity. A material document is createdin Materials Management to update the stock. At the same time, a document iscreated in Financial Accounting to post the evaluated goods to the material stockaccount or the consumption account (debit) and to a goods receipt / invoice receiptaccount (credit).

After the invoice has been received in the Invoice Verification, the VendorInvoice is checked as to the correctness of computation and content. All of thesepurchasing processes are handled by the Logistics components of the SAP system.

The vendor invoice is posted in Materials Management and, at the same time, adocument is created in Financial Accounting to post the invoice amount to thegoods receipt / invoice receipt account (debit) and the vendor account (credit). Thegoods receipt / invoice receipt account is used to make sure that a goods receipt isexecuted for every invoice and vice versa.

The Payment Processing usually takes place in Financial Accounting. It is herethat decisions are made about the payment process, such as, for example, thepayment methods and the bank settlement.