P2P : Procure to Pay Cycle in Oracle Apps

P2P CYCLE:

INVENTORY=> REQUIESTITION=> RFQ=> QUOTATION=> QUOTATION ANALYSIS=> PURCHASE ORDER =>

INVOICE => VALIDATE INVOICE => PAYMENT => TRANSFER TO GL => UNPOSTED JOURNAL=>
POST THE JOURNAL IN GL

DETAIL TECHNICAL DESCRIPTION ABOUT P2P CYCLE :

1. Creation of Requisition :

When organization's any item stock ended they raise requisition to get quotation against that item from
different vendor.
Requisition raise in Purchase order Responsibility.

Navigation : Purchase Order Superuser -> Requisition -> Requisitions

a) PO_REQUISITION_HEADERS_ALL (Requisition Header Information) :

Select * from PO_REQUISITION_HEADERS_ALL
where segment1 = '1234' -- segment1 will be rerequisition number

b) PO_REQUISITION_LINES_ALL (Requisition Lines Information ):

select * from PO_REQUISITION_LINES_ALL where requisition_header_id = (Select requisition_header_id

from PO_REQUISITION_HEADERS_ALL where segment1 = '1234')

Kindly press Approve button which send requisition for approval. Once it get approved from Manager its
status will get change to 'APPROVED' from 'INCOMPLETE'

2. Creation of Purchase Order (PO) against Requisition :

PO we can either create manually or using auto create option in Purchase order responsibility.

Navigation : Purchase order Responsibility -> Purchase Orders -> Purchase Orders

-> Click on Auto Create option on Purchase order screen

-> Search requisition '1234' detail
-> Click Automatic
-> it will create Purchase Order.
-> Kindly enter shipment details with ship-to details
-> Save Record and Submit For approval. Its status become APPROVED once approver approve PO.

a) PO_HEADERS_ALL (Po Header Information) :

Select * From PO_HEADERS_ALL where segment1='5700' -- segment1 is Po Number
b) PO_LINES_ALL (PO Line Level information) :
Select * From PO_LINES_ALL where Po_header_id = ( Select po_header_id From PO_HEADERS_ALL
where segment1='5700')

c) PO_LINE_LOCATIONS_ALL (PO shipment schedule information ):

Select * From PO_LINE_LOCATIONS_ALL Where Po_header_id = ( Select Po_header_id
From PO_HEADERS_ALL where segment1='5700')

d) PO_DISTRIBUTIONS_ALL (Distribution Information) :

Select * From PO_DISTRIBUTIONS_ALL Where Po_header_id = ( Select Po_header_id

From PO_HEADERS_ALL where segment1='5700')

3. Receiving Against Purchase Order

Purchasing Responsibility change the receiving Organization before we create receipt to which org you
supposed to ship the goods.

You can do this by entering PO number against which we want to receive.

Navigation : Purchasing Responsibility -> Receiving -> Receipt

-> Enter PO Number and click on Find

-> Receive the good against PO Number

a) RCV_SHIPMENT_HEADERS (Receipts Header Information )

Select * from RCV_SHIPMENT_HEADERS where po_header_id = ( Select Po_header_id
From PO_HEADERS_ALL where segment1='5700');

b) RCV_SHIPMENT_LINES (Receipts Lines Information)

Select * from RCV_SHIPMENT_LINES
where shipment_header_id = (Select shipment_header_id from RCV_SHIPMENT_HEADERS
where po_header_id = ( Select Po_header_id From PO_HEADERS_ALL where segment1='5700'));

c) RCV_TRANSACTIONS (Receipt Transaction Information)

Select * from RCV_TRANSACTIONS where po_header_id = ( Select Po_header_id From

PO_HEADERS_ALL where segment1='5700');

4. Creation of Invoice in Account Payables

Now you need to switch Responsibility from Purchasing to Payables (AP Module)

Navigation : Payables Responsibility -> Invoices -> Invoice

It will takes you to invoice workbench form.
Enter details on header like Invoice type (Standard, DM, CM etc), Supplier Name, Supplier Site etc.
-> Match invoice against PO Number or Receipt Number.
-> Initially its status will be Not Validated.
-> Go to Action -> Check Validate and press OK
-> See for Hold, If holds present then Release Hold.
-> Click on check box Force Approval. Press OK.
-> Click on 'Create Accounting' Check box and press OK.

a) AP_INVOICES_ALL (Invoice Header information)

Select * From AP_INVOICES_ALL where po_header_id = ( Select Po_header_id
From PO_HEADERS_ALL where segment1='5700');

b) AP_INVOICE_LINES_ALL (Invoice Lines Information)

Select * from AP_INVOICE_LINES_ALL where invoice_id = (Select invoice_id From AP_INVOICES_ALL
where po_header_id = ( Select Po_header_id From PO_HEADERS_ALL where segment1='5700'));

c) AP_INVOICE_DISTRIBUTIONS_ALL (Invoice Distributions information)

Select * from AP_INVOICE_DISTRIBUTIONS_ALL where invoice_id = (Select invoice_id
From AP_INVOICES_ALL where po_header_id = ( Select Po_header_id From PO_HEADERS_ALL
where segment1='5700'));

5. Payments done against Invoice in Payables

Navigation : Payables Responsibility -> Payments -> Payments

a) AP_PAYMENT_SCHEDULES_ALL (Payment Details)

Select * from AP_PAYMENT_SCHEDULES_ALL WHERE invoice_id = (select invoice_id from
AP_INVOICES_ALL WHERE po_header_id = ( Select Po_header_id From PO_HEADERS_ALL
where segment1='5700'));

b) AP_CHECKS_ALL (Checks Details)

Select * from AP_CHECKS_ALL where Check_num='Chq-1234';

6. Payables Transfer To GL

a) GL_JE_HEADERS (Journal Headers Information)

Select * from GL_JE_HEADERS

b) GL_JE_LINES (Jornal Lines Information)

Select * from GL_JE_LINES

c) GL_JE_BATCHES (Journal Batch Information ) : Select * from GL_JE_BATCHES;

Procure to Pay (P2P) Accounting

In Oracle purchasing 3 different events occur

1. Enter Purchase Order:
No accounting takes place

2. Enter a Receipt: (Defaults from Receiving Options and Purchasing Options)

For Inventory, Asset and Expense Items:
Dr: Inventory Receiving A/c
Cr: AP Accrual A/c

AT Inspection - No Accounting takes place.

3. Receiving Transaction:
Based on type of item here accounting entry differs
Inventory Item:
Dr: Inventory Valuation A/c
Cr: Inventory Receiving A/c
Expense Item: (Defaults from PO Distribution Options and Receiving Options)
Dr: Expense A/c
Cr: Inventory Receiving A/c
Asset Item:
Dr: Asset Clearing A/c
Cr: Inventory Receiving A/c

Oracle Payable:
In payable 3 events occur
1. Enter Invoice: : (Defaults from Purchasing Options and Supplier setup)
Dr: AP Accrual A/c
Cr: Liability A/c

2.Payment against Invoice: (Defaults from Invoice Header and Bank setup)
Dr: Liability A/c
Cr: Bank clearing A/c

3.Clearing (Cash Management): (Defaults from Bank setup)

Dr: Bank clearing A/c
Cr: Bank A/c

Oracle P2P Accounting entries

Incase below type of items one more accouting entry happens in Oracle
Inventory Item: Item issued to Dept.
Dr: Expense A/c
Cr: Inventory valuation
Asset Item: Asset is capitalized
Dr: Asset A/c
Cr: Asset clearing A/c

AP Liability account derived from Supplier Site and Financials Options Setup.

Period End Accrual @ Purchasing Options: Setup in Purchasing Option under Receipt Accounting. Select
PERIOD END for Accrue Expense Item. Here you defined Expense AP Accrual Account.

Payment Accounting - When Payment Clears @ Payables Options. You set this in Payable Options 
Accounting Option tab. Select When Payment Clears.

Procure to Pay (P2P) – Accounting Entries

1. Enter purchase order
When you enter a purchase order, accounts are created and stored with the purchase order
distribution. The accounts will eventually be used as a basis for creating accounting that is sent to the
general ledger. Creating a purchase order in and of itself generates no accounting that is sent to the
general ledger.
2. Receive
When you process a receipt, no accounting is created for period end accruals. Receipts that are accrued
at period end will always be for a destination type of expense.
3. Deliver and cost
When you deliver a receipt to its final destination, no accounting is created. The expense will be
recorded after matching to the purchase order, running the Payables Accounting process and
subsequently running the Payables Transfer to General Ledger process.
4. Period end accrual
If an invoice is not entered by period end, the Receipt Accruals - Period End process will generate
accruals and transfer the accounting for them to the GL Interface. Use the Journal Import program to
create unposted journals. This journal is created with a reversal date in a subsequent period. The journal
must be reversed so your receipt liability is not overstated.
5. Reverse accrual in the general ledger
In the subsequent period, reverse the prior period accrual.
6. Invoice and match
Entering an invoice and matching creates a debit to the Inventory AP Accrual account to clear the
liability for the uninvoiced receipt (you now have an invoice).
The entire credit is to the AP Liability account that defaults from the supplier site if the invoice unit price
is the same as the purchase order line unit price. Any difference is charged to the Invoice Price Variance
account.
For items with destination type of Expense, the Invoice Price Variance account will be the same as the
charge account. The AP Liability account is cleared when a payment is processed.
PO Matching Rules:
PO Matching rules can be set at five different levels to default them on to purchase order. Once
matching rule is defaulted on to PO we have the option to override them as needed.

In the list below, a setting at any level will override the settings above it.
1. Oracle Purchasing Options
2. Supplier Information
3. Line Types
4. Items
5. Purchase Order Shipments

2-Way:
In 2- way, we will compare two documents PO and Invoice.

Invoice Price < = Purchase Order Price

Invoice Quantity < = Purchase Order Quantity
3-Way:
In 3-Way you will compare 3 documents i.e PO+reciept+Invoice.

3-way matching verifies that the receipt and invoice information match with the quantity tolerances
defined:

Invoice Price < = Purchase Order Price

Invoice Quantity < = Purchase Order Quantity
Invoice Quantity < = Received Quantity
4-Way:
In 4-Way you will compare 4 documents i.e PO+Receipt+Invoice+Inspection.
4-way matching verifies that acceptance documents and invoice information match within the quantity
tolerances defined

Invoice Price < = Purchase Order Price

Invoice Quantity < = Purchase Order Quantity
Invoice Quantity < = Received Quantity
Invoice Quantity < = Accepted Quantity

Types of Purchase orders:

Oracle Purchasing supports four types of purchase orders
1.Standard PO: A Standard PO is created for one–time purchase of various items.
2.Planned PO: A Planned PO is a long–term agreement committing to buy items or services from a
single source. You must specify tentative delivery schedules and all details for goods or services that
you want to buy, including charge account, quantities, and estimated cost.
3.Blanket Agreement: A Blanket PO is created when you know the detail of the goods or services
you plan to buy from a specific supplier in a period, but you do not know the detail of your delivery
schedules.
4.Contract Agreement: Contract purchase agreements are created with your suppliers to agree on
specific terms and conditions without indicating the goods and services that you will be purchasing.