DotOne teamWhat is procure to pay?
Procure to pay (P2P) covers every step between identifying a need for goods or services and paying for them. It connects three teams: the department that needs the material, purchase, and accounts.
Procurement vs purchasing
- Procurement is the broader, strategic work: deciding what to buy, finding and evaluating vendors, negotiating terms and managing supplier relationships.
- Purchasing is the transactional part: raising purchase orders, following up deliveries and getting bills paid.
P2P includes both. See our guide on vendor management for the supplier side.
The procure to pay process in 8 steps
- Purchase requisition (indent). A department, or the stock system when an item falls below its reorder level, raises a request for material.
- Approval. The indent is approved against budget or need.
- Request for quotation (RFQ). Purchase asks several vendors for prices and terms.
- Vendor selection. Quotes are compared on price, terms, lead time and past performance.
- Purchase order (PO). A PO is raised to the chosen vendor, approved and sent.
- Goods receipt (GRN). Material is received against the PO, counted and checked for quality.
- Invoice matching. The vendor's bill is matched with the PO and the GRN.
- Payment. The matched bill is paid on its due date and recorded in accounts.
Three-way matching, with an example
Before paying, accounts checks that three documents agree: what was ordered (PO), what was received (GRN) and what was billed (vendor invoice).
| Item | PO | GRN (accepted) | Invoice | Result |
|---|---|---|---|---|
| MS sheet 2 mm (kg) | 2,000 @ ₹68 | 1,950 | 2,000 @ ₹68 | Pay for 1,950 kg only |
| Welding rods (boxes) | 40 @ ₹950 | 40 | 40 @ ₹990 | Rate mismatch: hold |
| Paint (litres) | 120 @ ₹310 | 120 | 120 @ ₹310 | Matched: pay |
Without the match, this business would have paid for 50 kg of steel it never accepted and an unagreed price increase on welding rods.
Common P2P problems and fixes
- Buying without a PO. Make the PO compulsory above a small limit, so every purchase is approved.
- Material bought too late. Raise indents automatically from reorder levels instead of waiting for stores to notice.
- Single quote, every time. Ask for at least three quotes for anything above a set value.
- Bills entered twice. Match each bill to its GRN and PO so it can only be booked once.
- Vendors chasing payment status. Give vendors a portal to see their orders and bills.
Procure to pay in DotOne
In DotOne Purchase Management, indents are raised automatically when stock falls below its reorder level, RFQs go to several vendors and come back for side-by-side comparison, POs are routed for approval, and material is received against the PO with quality checks. Vendors can work through a vendor portal, and purchase bills and debit notes sync to Tally.