Procure to pay
The buying cycle is called Procure to Pay (P2P). It starts when the company needs something and ends when the vendor is paid:
| Purchase requisition | An internal request: “we need 200 cartons”, approved according to its value. |
| Request for quotation | Ask several vendors for price and lead time. |
| Purchase order (PO) | A formal commitment to the vendor: item, quantity, price. |
| Goods receipt | The warehouse receives and counts; stock goes up. |
| Vendor bill | The vendor's invoice is recorded as an amount the company owes. |
| Payment | Payment after checking, on the due date. |
Three-way matching is one of the most important controls: before paying, the system compares the purchase order, the goods receipt and the vendor bill. If we ordered 100, received 90 and were billed for 100, payment is blocked until the difference is resolved. This prevents paying for goods that never arrived or at a price nobody agreed.
Watch outAn ERP can start the cycle itself: a “reorder rule” might say: if dates stock falls below 50 cartons, automatically create a purchase request for 200. That's what prevents stock-outs.