Procure to Pay Process(P2P)#ORACLEFUSION

Oracle Fusion Procure-to-Pay (P2P) is a comprehensive suite that automates and optimizes the entire procurement cycle — from requesting goods or services to making the final payment to suppliers.

1. Direct vs. Indirect Procurement

Direct Procurement

• Created automatically by Supply Chain Planning or Manufacturing Work Orders.

• Typically involves raw materials or components used in production.

Indirect Procurement

• Raised manually using Self-Service Procurement.

• Covers general business needs like IT equipment, training, or office supplies.

2. Requisition

A requisition is a formal request for products or services required for a job or project.Once created, it is routed to the appropriate approver for review and authorization.

Types of Requisitions:

1. Catalog Requisition – Raised from predefined catalogs.

2. Non-Catalog (Free Form) Requisition – For items or services not listed in catalogs.Example: HR requests external training services from a new vendor.

3. Internal Requisition (Transfer Order) – Used for transferring goods between Business Units (BUs) or warehouses.

3. Approval

Once submitted, the requisition goes through an approval process.The approver can either approve or reject the request.Approved requisitions are converted into Purchase Orders (POs) and sent to suppliers through:

• Supplier Portal

• Email

• B2B Integration

4. Sourcing

After approval, the procurement team begins the sourcing phase:

• Identify potential suppliers

• Obtain quotes or proposals

• Evaluate and select the most suitable supplier based on price, quality, and terms

5. Purchase Order (PO)

Once a supplier is selected, the team creates a Purchase Order (PO) and sends it to the supplier.The PO specifies product or service details, quantities, pricing, and delivery terms.

Types of Purchase Orders:

1. Standard PO – One-time purchase of goods or services.

2. Blanket Purchase Agreement (BPA) – Long-term agreement with negotiated prices but no fixed quantity.Example: Annual BPA with a chip supplier for up to 1 million units at ₹5 each. Each release (call-off) creates a standard PO against this BPA.

3. Contract Purchase Agreement (CPA) – Locks terms and conditions with a supplier but doesn’t define specific items or pricing.

4. Planned PO – Created in advance for recurring purchases; each delivery requires a schedule release.Example: Planned PO for monthly supply of packaging materials.

6. Receiving

When goods or services are delivered:

• The receiving team verifies that the items match the PO details.

• Any discrepancies are reported.

• Once verified, the receipt is recorded in the system.

Matching Rules:

• 3-Way Matching (Direct Procurement): PO ↔ Receipt ↔ Invoice

• 2-Way Matching (Indirect Procurement): PO ↔ Invoice

Invoice processing: After receiving the goods or services, the supplier sends an invoice to the company. The invoice has been reviewed and approved, and payment has been processed.

Invoice Type	Description
Standard	An invoice from a supplier for goods or services rendered.
Prepayment	An advance payment to a supplier. The status of a Prepayment type invoice after initial validation is Unpaid.
Credit Memo	A document from a supplier that provides a credit for goods or services rendered.
Debit Memo	A document from a supplier that doesn't send you a credit memo document.
Withholding Tax	An automatically-generated invoice to a tax authority for withholding tax. You can also create them manually by enabling the relevant option.
Interest	An automatically-generated invoice for interest on overdue invoices.
Standard Invoice Request	An invoice without a purchase order that’s submitted through the Supplier Portal and is pending approval from the requester.
Credit Memo Invoice Request	A credit memo without a purchase order that’s submitted through the Supplier Portal and pending approval.
Payment Request	A request from other modules (e.g., Expenses or Receivables) to disburse funds to a payee who isn’t defined as a supplier in the application.

Payments :

In Oracle Fusion Payables, a payment is the process of settling your supplier invoices — basically, paying the vendor for goods or services received.The payment process ensures that:

• Only validated and approved invoices are paid.

• Payments are made using the right bank account, currency, and payment method (like check, EFT, wire, etc.).

• The entire transaction is accounted and reconciled properly in the system.

🔁 End-to-End Payment Process Flow

🔁 End-to-End Payment Process Flow

Here’s the typical flow:

1. Invoice Creation & Approval

   • Invoices are created and validated.

   • They become eligible for payment once approved and due for payment.

2. Initiate PPR

   • A user creates a Payment Process Request manually, or it can be scheduled automatically.

   • You can filter invoices using parameters like supplier, due date, payment method, or currency.

3. Invoice Selection

   • The system picks up all invoices matching the criteria.

   • Payment validation checks (like supplier site, bank account, amount limits, etc.) happen here.

4. Build Payments

   • The PPR groups selected invoices based on rules (e.g., same supplier, payment method, bank account).

   • Each group becomes a Payment Instruction (which can represent one or more actual payments).

5. Format & Transmission

   • Oracle generates the payment file (for example, XML or text format) using BI Publisher templates.

   • The file is sent to the bank through a payment system (like Fusion Payments or via OIC integration).

6. Payment Confirmation

   • Once the bank confirms the payment, status changes to “Paid”.

   • Accounting entries are generated and posted to the General Ledger.

     
     

Oracle Fusion P2P ensures a smooth, auditable flow from requisition → sourcing → ordering → receiving → payment, minimizing manual errors and improving spend visibility across the organization.

Hope this Helps . happy Learning.