The procure-to-pay cycle, step by step
From a user's request to a supplier's payment: the stages, documents and controls every buyer should know.
Procure-to-pay (P2P) is the chain of steps that turns a business need into goods received and a supplier paid. Getting each step right prevents most of the problems buyers deal with later.
1. Identify the need
A user department recognises a requirement. Good procurement teams challenge the need early: is it necessary, can existing stock be used, can the specification be simpler?
2. Requisition and approval
The purchase requisition records what is needed, how many, when and against which budget. Approval limits make sure the right person signs off.
3. Sourcing
For standard items with a clear specification, an RFQ compares prices. For complex requirements, an RFP compares solutions. Agree evaluation criteria before receiving offers.
4. Purchase order
The PO is the commercial commitment: item, quantity, price, delivery terms, payment terms and the applicable conditions.
5. Receipt and inspection
The goods received note (GRN) records what actually arrived and in what condition. Rejections and shortages are recorded here.
6. Invoice and three-way match
Before payment, match the PO, GRN and invoice. Differences in price or quantity are resolved before the supplier is paid.
7. Payment and review
Pay on the agreed terms — early-payment discounts may be worth taking — and feed performance data into supplier reviews.
A simple rule: no PO, no payment. It keeps spend visible and controlled.