1. The “Purchase-to-Pay” (PtoP) Process
Chapter 12
The “Purchase-to-Pay” (PtoP) Process
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2. Learning Objectives
To describe the business environment for the Purchase-to-Pay (PtoP) process
To analyze the effect of enterprise systems and other technologies on the PtoP process
To describe the PtoP process logic, physical characteristics, and support of management decision making
To describe and analyze the controls typically associated with the PtoP process
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3. The Purchase-to-Pay Process
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FIGURE 12.1

4. A Vertical Perspective of the PtoP Process
NOTES:
1. This figure represents a partial organization chart for the finance and logistics functions.
2. The broken lines represent vertical information flows (often in the form of management reports) based on data captured or generated by the PtoP process.
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FIGURE 12.2

5. Horizontal Information Flows
Purchase requisition from inventory control to purchasing
Requisitions from other departments to purchasing
Purchase order (PO) to vendor
PO notification to other departments or inventory
PO notification to receiving
PO notification to accounts payable
Goods/services received from vendor
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6. Horizontal Information Flows (cont’d)
Receiving notification to accounts payable (AP)
Receiving notification to purchasing
Invoice received from vendor
Approved voucher to cashier
AP notification and inventory cost information to general ledger (GL)
Check to vendor by cashier
Paid voucher to accounts payable
Notification of cash disbursement to GL
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7. A Horizontal Perspective of the PtoP Process
NOTES:
1. The information flows are representative of those related to the PtoP process. The figure, however, does not show all information flows. For example, purchase returns are not shown.
2. See Table 12.1 for a description of information flows 1–15.
FIGURE 12.3
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8. Description of Information Flows*
Flow No. Description
1 Purchase requisition sent from inventory control department to purchasing department
2 Purchase requisitions from various other departments sent to purchasing department
3 Purchase order sent to vendor
4 Purchase order notification sent to various other departments or to inventory control department
5 Purchase order notification sent to receiving department
6 Purchase order notification sent to accounts payable department
7 Goods and services received from vendor
8 Receiving notification sent to accounts payable department
9 Receiving notification sent to purchasing department
10 Invoice received from vendor
11 Approved voucher sent to cashier
12 Accounts payable notification and inventory cost information sent to general ledger
13 Check sent to vendor by cashier
14 Paid voucher returned to the accounts payable department
15 Notification of the cash disbursement sent from the cashier to the general ledger
* Many of these steps may be automated. See Technology Insight 12.1 for a description of these steps in an enterprise systems implementation.
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TABLE 12.1

9. The PtoP Process—Level 0 Diagram
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FIGURE 12.4

10. Sample Purchase Requisition Screen (JD Edwards)
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FIGURE 12.5

11. Sample Purchase Order Release Screen (JD Edwards)
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FIGURE 12.6

12. PtoP Process—Systems Flowchart
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FIGURE 12.7a

13. PtoP Process—Systems Flowchart (continued)
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FIGURE 12.7b

14. PtoP Process—Systems Flowchart (continued)
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FIGURE 12.7c

15. PtoP Process—Systems Flowchart (continued)
RA = Remittance Advice
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FIGURE 12.7d

16. Enterprise System Support for the PtoP Process
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TI 12.3a

17. Enterprise System Support for the PtoP Process (cont’d)
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TI 12.3b

18. Control Matrix for the PtoP Process
IV = input validity IC = input completeness IA = input accuracy UC = update completeness UA = update accuracy
Key: possible system goals: A – Select vendor – best quality, lowest price by promised delivery data
B – Ensure that right goods in acceptable condition received
C – Optimize cash discounts D – Ensure sufficient but not excessive cash
E – Comply with corporate code of conduct
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FIGURE 12.8a
Explanation of cell entries – see Exhibit 12.1.

19. Control Matrix for the PtoP Process (cont’d)
IV = input validity IC = input completeness IA = input accuracy UC = update completeness UA = update accuracy
Key: possible system goals: A – Select vendor – best quality, lowest price by promised delivery data
B – Ensure that right goods in acceptable condition received
C – Optimize cash discounts D – Ensure sufficient but not excessive cash
E – Comply with corporate code of conduct
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FIGURE 12.8b
Explanation of cell entries – see Exhibit 12.1.

20. PtoP Process—Diagram 1 FIGURE 12.9
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FIGURE 12.9

21. PtoP Process—Diagram 2 FIGURE 12.10
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FIGURE 12.10

22. PtoP Process—Diagram 3 FIGURE 12.11
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FIGURE 12.11

23. PtoP Process—Diagram 4 FIGURE 12.12
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FIGURE 12.12

24. Entity-Relationship (E-R) Diagram (Partial) for the PtoP Process
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FIGURE 12.13

25. Selected Relational Tables (Partial) for the PtoP Process
FIGURE 12.14
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