The goods receipt triggers a couple of actions: 1. Once the buyer has actually received the goods that they’ve requested, they’ll then check the quality of the order: Did the vendor ship the right number of products? Is the product itself in good condition? If these sorts of things are in order, then the buyer will issue a goods receipt. However, approval can be a cumbersome step of the overall P2P process, since the purchase order must pass through several hands and may encounter many bottlenecks. The process of approving purchase orders is a necessary step, particularly when companies have a manual P2P process, since approval can catch important errors.

Once the necessary teams on the buyer’s side have signed off, the vendor receives the purchase order and must then agree to it. Often, purchase orders are rejected and must go back and forth within the organization until all of the information is correct. The first party that needs to give the green light to a PO is the buyer’s accounting team. Next, the purchase order must be approved by various stakeholders. Both the buyer and vendor must approve this document. A PO is a document sent to a vendor stating the scope of work being agreed upon. Once the department has created and submitted a purchase requisition-and accounting has approved it-a document called the purchase order (PO) goes to the vendor. Next, once the department that wants the purchase decides on the vendor, cost, scope and timeline, that department must submit a purchase requisition-i.e., a formal request to make a purchase-to accounting. The purchase requisition remains within the buyer’s company and does not pass to the vendor. This step includes the identification of the team’s needs as well as potential vendors and cost of the goods or services in question. Or, human resources might need help with hiring and decide that they should purchase an applicant tracking system. For example, the marketing team might determine that they need an email marketing management platform. That means determining who to hire to provide the goods or services necessary to meet their needs. First, a company must identify their needs and how to meet them.

Procure to pay process sap