INFORSY-LEC4-P2P (QUIZ 1) Flashcards
(21 cards)
The ______________, also known as purchase-to- pay, is how an organization
procures, purchases, and pays for the goods and services they need to do
business. As the name suggests, it starts with finding suppliers to procure
these goods and services from and ends with paying for them.
procure-to-pay process
a document used within organizations to request the purchase of goods or services.
Purchase Requisition (PR)
a document that organizations use to solicit bids from potential vendors or service providers.
Request for Proposal (ROP)
serves as a contractual agreement between the buyer and the seller, outlining the specific details of the purchase transaction.
Purchase Order (PO)
a document stating the type and quantity of goods that have arrived at a place, which the buyer signs to show that they have received the goods
Delivery Receipt/Note
a specific unit, department, or division within an organization that is responsible for incurring costs and generating expenses. Cost Centers are typically associated with indirect costs or overhead expenses, which are not directly attributable to a specific product, service, or revenue-generating activity.
Cost Center
serves as a confirmation that the delivered items match the quantity, quality, and specifications specified in the purchase order.
Goods Receipt
the process of matching purchase orders (PO), goods receipt notes, and the supplier’s invoice to eliminate fraud, save money, and maintain adequate records for the audit trail.
Three-way matching
a document issued by a seller to a buyer to notify them of current debt obligations.
Debit Note
has a broader scope; a form used to pay an
obligation to employees/individuals/agencies/creditors for goods purchased or services rendered which can be internal (reimbursements) or external (invoice payment).
Disbursement Voucher
a document that authorizes the payment of a specific amount of money.
Payment Voucher
Procure to Pay Steps:
- Identify the Needs
- Creation and Approval of PR
- Vendor Selection
- Purchase Order (PO) Approval and Issuance
- Goods Receipt
- Invoice Received and Approval
- Payment
- Vendor Management System
- Supplier Performance Review
Determine the needs and identify preferred vendors, if known. Identifying the need for specific goods and services and setting out what budget is available for the proposed purchase. A needs analysis or goods request form should outline:
* who you are buying for and who needs the goods, works, or services
* how the goods, works, or services you plan to buy benefit the people you are buying for, now and in the future
* when these goods, works or services are needed
* geographical areas that need the goods, works, or services
* the expected outcomes of your procurement
Identify the needs
- Access and fill out the requisition
form. - Provide a clear justification for the
purchase. - Indicate the cost center to which the
purchase will be charged. - Review and submit PR.
- Approve and keep track of the
progress of PR.
Creation and Approval of PR
This can either be a quick process of sorting through a short list of approved vendors, or the procurement department can send out a request for proposal (RFP) outlining the requirements. When an RFP is placed, suppliers return a bid on the job, detailing turnaround time, price, and material specifications.
Vendor Selection
This will require the correct approvers to
sign off on the document, either physically
or digitally. In an automated system, POs
are automatically routed to the correct
approver for quick electronic approval.
The purchasing team creates a purchase
order with all the information the vendor
needs to fulfill the order. Once the vendor
receives the PO and formally accepts it, it
becomes a legally binding contract that
states that the vendor will provide these
goods or services and the buyer will pay for
them within a given time frame.
Purchase Order (PO) Approval and Issuance
It involves the physical receipt,
inspection, and recording of goods
or materials that are delivered by a
supplier or vendor.
A _____________ is a document
associated with accounts payable
wherein the supplier of goods
provides evidence that the goods
have been received by the
purchaser so that the payment can
then be made to the supplier.
goods receipt
The vendor submits an invoice, which is entered into the buyer’s accounts payable
system. Automated systems often support electronic invoicing (e-Invoicing) through
the use of vendor portals.
Once it’s confirmed the invoice matches the receiving documents and the PO, it must be approved by the accounts payable team for payment. This may require double-checking with purchasers to ensure that the goods or services were received and of high quality, but three-way matching on its own is often enough for AP teams to approve routine invoices.
Invoice Received and Approval
Invoices approved for payment are
routed by the buyer’s finance team to
accounts payable (AP). Vendor
payments are made according to
agreed-upon payment terms, and the
accounting system is updated to
reflect that the order was paid.
Payment
A ____________ is a technology-based solution or software platform that helps organizations manage their interactions and relationships with external suppliers, vendors, contractors, and service
providers more efficiently.
Vendor Management System (VMS)
A _____________________ is a
systematic evaluation of a supplier’s
performance based on predefined
criteria and key performance indicators
(KPIs). It allows organizations to assess
the effectiveness and efficiency of their
suppliers in meeting contractual
obligations, delivering quality products
or services, and contributing to the
organization’s overall success.
supplier performance review
