What is P2P Cycle? What are the steps?

Question

Accepted Answer

P2P Cycle is the process of procuring goods or services from a supplier and paying for them.

The process starts with identifying the need for goods or services.
Then, a purchase order is created and sent to the supplier.
The supplier delivers the goods or services and sends an invoice.
The invoice is matched with the purchase order and goods receipt.
The invoice is approved for payment and payment is made to the supplier.
Finally, the payment is reconciled with the accounts payable ledger.
Example: A company needs to purchase office supplies. They create a purchase order and send it to a supplier. The supplier delivers the supplies and sends an invoice. The invoice is matched with the purchase order and goods receipt. The invoice is approved for payment and payment is made to the supplier. The payment is reconciled with the accounts payable ledger.