Procure-to-pay process Steps:
Step 1: Identify needs
The first step of a procure-to-pay process is to determine and define the
requirements with the help of Departmental stakeholders (Bar, Cafetaria,
Consumables, maintenance contracts, etc). Once a valid need is identified,
sketch out specifications for goods/products and terms of reference (TOR) for
services, and statements of work (SOW).
Step 2: Create Purchase Requisitions
After finalizing the specifications/TOR/SOW, a Purchase Requisition PR is
created. Authorised requester submits the filled-out purchase requisition form
after ensuring that all necessary administrative requirements are met.
Requisitions can be created for any type of procurement from standard
purchases of A, B or C Class items to subcontracts (Maintainance, Fuel,
Consumables..) and consignments (Bar). Items are classified as
A: High Value rarely used items for which 3 quotations are required
B: Medium value items can be procured from an Approved Supplier list and
C: Frequently procured items from approved vendor list/ rate contracts
Step 3: Purchase Requisition/ PR approval
Submitted purchase requisitions are then reviewed by department heads and
MICs. Approvers can either approve or reject a purchase requisition after
evaluating the need, verifying the available budget, and validating the
purchase requisition form. Incomplete purchase requisitions are rejected
back to the initiator for correction and resubmission.
Step 4: Create a PO/spot buy
If the requested goods/products have B class characteristics such as rare
category purchase, one-time unique purchases, purchase orders are
created from approved purchase requisitions.
C Class items ( low value, frequently procured, readily available
consumables(cleaning materials,GHK items,etc) can be procured from the
approved vendor list without re-tendering.
Step 5: Purchase order approval
Purchase orders are now sent through an approval loop to ensure the
legitimacy and accuracy of specifications. Approved purchase orders are
then dispatched to vendors. After reviewing the purchase order vendors can
either approve, reject, or start a negotiation. Once Purchase Manager
approves a purchase order, a legally binding contract is activated.
Step 6: Goods receipt
Once the supplier delivers the promised goods/services, the buyer inspects
the delivered products or services to ensure that it complies with the contract
terms. The goods receipt is then approved or rejected based on the
standards specified in the purchasing contract or purchase order.
Step 7: Supplier performance
Based on the data obtained from the previous step, the supplier performance
is evaluated. A number of factors like quality, on-time delivery, service,
contract compliance, responsiveness, and Total Cost of Ownership (TCO).
Non-performance is flagged in existing rosters and information systems for
future reference.
Step 8: Invoice approval
Once a goods receipt is approved, a three-way match between the purchase
order, the vendor invoice, and the goods receipt is performed. If there are no
discrepancies found, the invoice is approved and forwarded to the finance
team for payment disbursement. In the case of inaccuracies, the invoice is
rejected back to the vendor with a reason for rejection.
Step 9: Vendor payment
Upon receiving an approved invoice, the finance team will process payments
according to the contract terms. Any contract changes or reviews of financial
insecurity will be taken into account. A payment made to a supplier will fall
into one of the following five types: advance, partial, progress or installment,
final, and holdback/retention payments.
Key stages in the procure-to-pay process
- Error reduction
- Accountability (Through signatures/periodic reviews
- Efficiency and Speed
- Remote accessibility
BEST PRACTICES
Keep the process transparent
Improve supplier engagement
Optimise inventory
Streamline contract management
