Procurement Overview

PayInvoice-P2P follows a structured Procure-to-Pay cycle where each step feeds into the next. Budget is validated at key checkpoints, and approvals are enforced through configurable workflows.

The P2P Flow

┌──────────────┐     ┌─────────┐     ┌───────────────┐     ┌────────────────┐
│  Purchase    │────▶│   RFQ   │────▶│   Supplier    │────▶│   Purchase     │
│  Request     │     │         │     │   Quotation   │     │   Order        │
│  (Requisition)│     │         │     │  (Comparison) │     │ ✓ Budget Check │
└──────────────┘     └─────────┘     └───────────────┘     └───────┬────────┘
                                                                    │
                          ┌─────────────────────────────────────────┘
                          ▼
                   ┌────────────────┐     ┌────────────────┐     ┌──────────┐
                   │   Purchase     │────▶│   Purchase     │────▶│ Payment  │
                   │   Receipt      │     │   Invoice      │     │ Entry    │
                   │   (GRN)        │     │ ✓ Budget Check │     │          │
                   │ ✓ Provisional  │     │ ✓ GST/E-Invoice│     │          │
                   └────────────────┘     └────────────────┘     └──────────┘

What Happens at Each Stage

1. Purchase Request (Purchase Requisition)

A department head or project manager identifies a need and raises a Purchase Requisition. This is the starting point of the procurement cycle.

• Who creates it: Department users, project managers
• What it captures: Items needed, quantities, required-by date, budget code (WBS)
• What happens next: Approved MR can be converted to an RFQ or directly to a Purchase Order

➡️ Purchase Request details

2. Request for Quotation (RFQ)

The procurement team sends an RFQ to multiple suppliers to get competitive pricing.

• Who creates it: Procurement officers
• What it captures: Items from MR, list of suppliers to invite, submission deadline
• What happens next: Suppliers submit quotations, which are compared side-by-side

➡️ RFQ details

3. Supplier Quotation & Comparison

Suppliers respond with their pricing. PayInvoice provides comparison tools to evaluate quotes.

• Who reviews it: Procurement officers, budget managers
• What it captures: Supplier prices, terms, delivery timelines
• What happens next: Best quotation is selected and converted to a Purchase Order

➡️ Supplier Quotation details

4. Purchase Order

The formal order to the supplier. This is where budget enforcement kicks in — the system validates that sufficient budget exists under the selected WBS code before allowing submission.

• Who approves it: Approval workflow (configurable by amount, department, etc.)
• Budget checkpoint: Available Budget must cover the PO amount
• What happens next: Supplier delivers goods → GRN, or supplier sends invoice → PI

➡️ Purchase Order details

5. Purchase Receipt (Goods Receipt Note / GRN)

When goods arrive, a GRN is created against the Purchase Order. If provisional accounting is enabled, a provisional journal entry is created automatically.

• Who creates it: Stores/warehouse team
• What it captures: Quantities received, accepted, rejected
• Provisional accounting: Creates a provisional liability entry (reversed when PI is submitted)

➡️ Purchase Receipt details

6. Purchase Invoice

The supplier's invoice is entered and matched against the PO and/or GRN. Budget is validated again. GST calculations, e-invoice generation, and TDS withholding happen at this stage.

• Who creates it: Accounts Payable team
• Budget checkpoint: Final budget validation before booking the expense
• Compliance: GST auto-calculated, e-invoice generated via NIC, TDS applied per supplier category

➡️ Purchase Invoice details

7. Payment Entry

Payment is processed to the supplier, reconciled against outstanding invoices.

• Who creates it: Finance/treasury team
• SAP sync: Payment status syncs back to SAP if integration is enabled

➡️ Payment Entry details

Alternative Flows

Not every procurement follows all seven steps. Common shortcuts:

Scenario	Flow
Direct PO (known supplier, no bidding needed)	MR → PO → GRN → PI
Emergency purchase (urgent, single supplier)	PO → PI (no MR or RFQ)
Service purchase (no physical goods)	MR → PO → PI (no GRN)
Tender-based (large project procurement)	Tender → RFQ → SQ → PO → GRN → PI
Advance payment	PO → Payment Entry (advance) → GRN → PI (advance adjusted)

Budget Enforcement Points

Budget is checked at two critical points in the flow:

1. Purchase Order submission — system checks if the WBS code has sufficient available budget. If not, submission is blocked with an error showing the shortfall.

2. Purchase Invoice submission — system validates again, because budget may have been consumed by other POs since the original PO was placed.

Budget Check Is Mandatory

If a WBS code is assigned to a PO or PI, budget validation cannot be bypassed. If budget is insufficient, the document cannot be submitted until a Budget Amendment or Budget Transfer provides the required funds.

Workflow Enforcement Points

Configurable approval workflows can be applied at any stage. Typical configurations:

• Purchase Request: Department head approval for amounts over threshold
• Purchase Order: Multi-level approval (manager → finance → director based on amount)
• Purchase Invoice: Finance controller approval before posting
• Payment Entry: Treasury approval for large payments

➡️ Workflow Setup details

Related Pages

• Budget Overview — How budget management integrates with procurement
• Workflow Setup — Configuring approval chains
• Advance Payments — Paying suppliers before delivery