In this article, we will see the steps involved in Procure to Pay Cycle.

Here is the
diagrammatic representation:

) Create Requisition:

Requisition is nothing but a formal request to buy something (like Inventory material, office
supplies etc) needed for the enterprise. Only an employee can create one. There are two
types of requisitions:

Internal Requisition: Internal requisitions provide the mechanism for requesting and
transferring material from one inventory to other inventory.
Purchase requisition: Unlike Internal requisitions, Purchase requisitions are used for
requesting material from suppliers.

Navigation:
Purchasing Vision Operations (USA) > Requisitions > Requisitions
Choose the requisition type and enter the Item, quantity, Price details in the Lines tab.
In Source Details tab, specify the Buyer name.

Click the Distributions button. Enter the Charge Account.

Save the work. The status of the requisition will now be “Incomplete”. And now the Approve
button is highlighted. The requisition needs to be approved first before proceeding further by
the concerned authority. Submit this requisition for Approval by clicking on the Approve
button. The status will now be updated to “In Process” .The workflow then will send an
Approval notification to the concerned person (derived based on hierarchy used—Position or
Supervisor hierarchy) using which he can Approve or Reject the requisition.
At any time the status of requisition can be checked using the Requisition summary window.

Navigation:

Requisitions > Requisition Summary

Enter requisition number and click on the find button.

 We can also check the Action History of requisition (it will show details about who has
submitted, approved and cancelled the requisitions)as below:

Navigation:

Tools menu > Action History.

Underlying Tables:

PO_REQUISITION_HEADERS_ALL

PO_REQUISITION_LINES_ALL

PO_REQ_DISTRIBUTIONS_ALL

2) Create Purchase Order:

There are 4 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

Navigation for creating a standard PO:

Purchase Orders > Purchase Orders

Choose type as Standard Purchase Order. Enter the Supplier, Buyer. In the Lines tab, specify
the line number, line type, Item, quantity, price etc.
Click Terms to enter terms, conditions, and control information for purchase orders.

Click Currency button to enter and change currency information for purchase orders, RFQs,
and quotations.

Click Shipments button to enter multiple shipments for standard and planned purchase order
lines Purchase order shipment specifies the quantity, ship–to organization and location, date
you want your supplier to deliver the items on a purchase order line, and country of origin for
the items. When you save, Purchasing creates distributions depending on the default
information available.
To enter more shipment information, select the More tab.

 Enter the Receipt Close Tolerance percent, Invoice Close Tolerance percent to set
the receiving and invoice close point.

 Select one of the following options for Match Approval Level:

Two–Way: Purchase order and invoice quantities must match within tolerance before the

corresponding invoice can be paid.

Three–Way: Purchase order, receipt, and invoice quantities must match within tolerance

before the corresponding invoice can be paid.

Four–Way: Purchase order, receipt, accepted, and invoice quantities must match within

tolerance before the corresponding invoice can be paid.

 Select an Invoice Match Option:

Purchase Order: Payables must match the invoice to the purchase order.

Receipt: Payables must match the invoice to the receipt.

Save the work.

Click the Receiving Controls button to enter receiving control information for purchase orders.

- Enter the maximum acceptable number of Days Early and Days Late for receipts.

- Enter the Action for receipt date control.

- Enter the maximum acceptable over–receipt Tolerance percent (receipts that exceed the
quantity received tolerance).

- Enter the Action for Overreceipt Quantity.

- Select Allow Substitute Receipts to indicate that receivers can receive substitute items in
place

of ordered items.

- Enter the default Receipt Routing that you assign goods: Direct Delivery, Inspection
Required,

or Standard Receipt.

- Enter the Enforce Ship To location option to determine whether the receiving location must
be

the same as the ship–to location.

Save the work.

Click Distributions button to enter distributions for the shipments.

Select more tab to enter more details and the requisition number (optional).

Save the work.

Click on the Approve button to initiate the Approval process.

Underlying Tables:

PO_HEADERS_ALL
PO_LINES_ALL
PO_DISTRIBUTIONS_ALL (REQ_HEADER_REFERENCE_NUM in Distributions table is the
Requisition number for this PO)

3)Create Receipt:
Create a receipt to receive the items in the Purchase Order.

Navigation:
ReceivingàReceipts
Enter the PO Number and select find button.

Go to Lines, check the lines you want to receive in the PO.

Click on Header button and Save which creates the receipt.

Receipt Tables are:
RCV_SHIPMENT_HEADERS

RCV_SHIPMENT_LINES (Lines Table has PO_HEADER_ID)

4)Create Invoice in Payables:

Once the goods are received, it’s time to pay the vendor for the goods purchased and hence
the invoices are created.
Navigation:

Payables, Vision Operations (USA) > InvoicesàEntryàInvoices

Enter type — Standard, supplier information and amount.

Click the Match button to match to either Purchase Order or Receipt (depending on the
Invoice Match option specified on the PO) and avoid manually entering the invoice.

Enter the PO Number you want match to and click Find.

Select the lines required and click on Match button.

Click on Distribute button
to navigate to the Match to Purchase Order Distributions window.

This creates the invoice and you can see the status of the invoice as “Never Validated”. it has
to be Validated and Accounted before you can pay it.

Validating the Invoice:

Click on Actions Button and Select “Validate”. Click on OK button.

Now you can see the status of the invoice as “Validated”, if there are no issues during
validation.

Create Accounting Entries:

Click on Actions Button and Select “Create Accouting”. Click on OK button.

Now we can see the Accounted status as “Yes”.

You can see the Accounting Entries here:

Tools àView Accounting

Invoice Tables:

AP_INVOICES_ALL

AP_INVOICE_DISTRIBUTIONS_ALL

Accounting Entries Tables:

AP_ACCOUNTING_EVENTS_ALL

AP_AE_HEADERS_ALL

AP_AE_LINES_ALL

5)Making a Payment:

Go to the Invoice window and query the invoice you want to pay. You would see Amount paid
as 0.00 before you make a payment.

Click Actions button. Select “Pay in full” and click “OK”.

Select the Bank Account and Document. Save the Work.

Now that the payment is made, when you query for the invoice in Invoice window, you will the
Amount Paid as $4,000.00.
Create Accounting entries for payment.

Click Actions and select “Create Accounting”

Select the void checkbox to cancel the payment.

View Accounting Entries:

In the Payments window, query for the payment.

Tools menuàView Accounting

Payment Tables:

AP_INVOICE_PAYMENTS_ALL

AP_PAYMENT_SCHEDULES_ALL

AP_CHECKS_ALL

AP_CHECK_FORMATS

AP_BANK_ACCOUNTS_ALL

AP_BANK_ACOOUNT_USES_ALL

AP_BANK_BRANCHES

AP_TERMS

You can also pay the invoices using Payment Batch screen. Refer to the article “Make AP
Payments through Payment Batches”

6)Transfer to General Ledger:

Navigation:

Payables Responsibility > View Requests

Run the concurrent program “Payables Transfer to General Ledger” with the required
parameters.
Companies might have to transfer material from one warehouse
(inventory organization) to other warehouse depending on the
current on-hand stock and demand at each location. Oracle ERP
provides a couple of ways to achieve this requirement.

1) Internal requisition to internal sales order

2) Inter Organization Transfer ( I have covered this in another
article)
Normally Internal requisition will be created by the destination
organization who wish to receive the material from source
organization. Now a days companies being so global we may not
have people assigned dedicatedly to work on individual warehouse
so Internal requisitions can be created by a planner (employee /
person) who is responsible for planning on-hand quantities at
different warehouses.

First, Start with creating internal requisition. Make sure requisition

type is selected as “Internal requisition”.
Source Organization is the warehouse where we have ample
inventory stock and ready to give.

Destination organization is the requesting warehouse where

material is required.
Submit requisition for approval.
Make sure requisition is approved.

Go to View > Requests > Submit a New Request

Submit “Create Internal Orders” concurrent program for the
operating unit in which our requisition is created.
Switch responsibility to Order Management responsibility.

View > Requests > Submit a New Request

Run “Order Import” concurrent program with Order source as

internal and order reference as requisition number.
Make sure “Order Import” concurrent program is completed.

Navigate to Order Organizer and search input Order Source as

“Internal” and Order Source reference is your requisition number.
Click Find to get your sales order.
Observer that the customer that is populated will be your internal
customer
If you would like confirm the Sales order link with requisition you
can navigate to “Others” tab and at the bottom you can see the
requisition number in Order source reference column.