What is Procurement to Payment (P2P) Process in SAP MM?

What is Procurement to Payment (P2P) Process in SAP MM:

The Procurement to Payment (P2P) process in SAP is a key component of the Materials Management (MM) module, which facilitates the entire cycle of purchasing goods or services from external vendors and ensuring payment for those goods or services. Below is an overview of the process:

Steps in the P2P Process:

1. Requirement Determination

Objective: Identify the need for goods or services within the organization.

SAP Transactions:

👉 Create a purchase requisition (ME51N).

👉The purchase requisition may be created manually or automatically through the Material Requirements Planning (MRP) process.

2. Source Determination

Objective: Identify potential vendors to fulfill the requirement.

SAP Features:

👉Use the source list (ME01) or vendor master data.

👉Conduct a request for quotation (RFQ) if necessary (ME41).

👉A comparison of quotes (ME49) helps select the best vendor.

3. Vendor Selection and Purchase Order Creation

Objective: Choose a vendor and create a purchase order (PO).

SAP Transactions:

👉Create or modify a purchase order (ME21N/ME22N).

👉The PO serves as a formal agreement between the organization and the vendor.

4. Goods Receipt

Objective: Receive and verify the goods or services.

SAP Transactions:

👉Post the goods receipt (MIGO).

Key Points:

👉Stock levels are updated.

👉Goods Receipt (GR) document is generated.

👉Quality inspection may be performed if configured.

5. Invoice Verification

Objective: Verify the vendor's invoice for accuracy.

SAP Transactions:

👉Post the incoming invoice (MIRO).

Verification checks include:

1. Quantity

2. Price

3. Taxes

4. Payment terms

6. Payment Processing

Objective: Make payment to the vendor as per agreed terms.

SAP Transactions:

👉Process payment (F110 for automatic payments or manual processing via FB60/FB03).

👉Payment can be made through various modes such as bank transfers, checks, or electronic funds transfer (EFT).

Key Components Involved:-

Master Data:-

1.Vendor Master

2.Material Master3.Info Records

4.Source List

Documents Flow:

Purchase Requisition → Sources Evaluation → RFQ→ Evaluation of Quotation → Purchase Order → Goods Receipt → Invoice → Payment

Integration with Other SAP Modules:

👍SAP FI (Financial Accounting): Payment and invoice processing.

👍SAP CO (Controlling): Cost assignment during procurement.

👍SAP SD (Sales and Distribution): For intercompany transactions.

👍SAP WM (Warehouse Management): For goods storage after receipt.