In brief
Purchase-to-pay (P2P) refers to the end-to-end procurement process from the requirement notification through ordering and goods receipt to payment of the invoice.
Contents
What is Purchase-to-pay?
The purchase-to-pay process links purchasing, warehousing and accounting. It begins with a purchase requisition, proceeds via approval, purchase order and order confirmation to goods receipt and ends with invoice verification and payment. The term procure-to-pay is usually used synonymously, but is sometimes defined more broadly to include supplier selection and contract management.
A central control tool is three-way matching: the purchase order, goods receipt and invoice are checked for agreement on item, quantity and price before payment is released. KPIs such as cycle time per order, the share of orders placed via catalogues or framework agreements, process costs per order and the share of invoices with discrepancies show how efficiently the process is running. The more discrepancies have to be resolved manually, the longer payment takes and the higher the process costs.
Especially in MRO, with many small orders, the process effort is often greater than the value of the goods. Automation via e-procurement, catalogues, call-off orders and electronic invoices reduces this effort. At the same time, a clean P2P process ensures that emergency orders remain traceable and are not handled by bypassing purchasing.
In practice: maintenance and procurement
Many invoice discrepancies arise from imprecise purchase orders. Unambiguous item descriptions with the manufacturer part number, agreed prices and clear delivery addresses in the order make subsequent matching easier and speed up approval.
Synonyms and abbreviations: P2P · procure-to-pay · purchase to pay · order-to-payment process
Frequently asked questions
What is the difference between purchase-to-pay and procure-to-pay?
The two terms are often used synonymously. Where a distinction is made, purchase-to-pay describes the operational sequence from purchase order to payment, while procure-to-pay additionally includes upstream steps such as demand planning, supplier selection and contract negotiation. Which definition applies is usually set out by each company in its process description.
Which steps does the P2P process comprise?
Typical steps are the requirement notification or purchase requisition, approval, purchase order to the supplier, order confirmation, goods receipt with inspection, receipt of the invoice, invoice verification against purchase order and goods receipt, and payment. Depending on the company, steps such as supplier selection or call-offs from framework agreements are added.
What is three-way matching?
In three-way matching, accounting compares the purchase order, the goods receipt posting and the supplier invoice. If items, quantities and prices match, the invoice can be released. Discrepancies, such as partial deliveries or price differences, are resolved before payment. This prevents duplicate payments and payments for goods not delivered.