Whether you're a professional in procurement, finance, or operations—or simply looking to understand business processes more deeply—this guide will walk you through the essentials of the Procure-to-Pay (P2P) cycle.

From identifying purchase needs to processing invoices and making payments, we break down each step clearly and practically. Our aim is to help you understand how the P2P process works, why it matters, and how it can be improved for better efficiency and control.

Let’s get started on your journey toward mastering this critical business function.

Clear P2P Playbook Guide

$15.00

Copyright © 2025 by Regina Smith. All rights reserved.

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Term	Definition
P2P	Procure-to-Pay: End-to-end process from procurement to payment.
PR (Purchase Requisition)	Internal document requesting the purchase of goods or services.
PO (Purchase Order)	Commercial document issued to the vendor to authorize the purchase.
GRN (Goods Receipt Note)	Confirmation that goods or materials were received as per the PO.
MRN (Materials Receipt Note)	Alternate term for GRN; often used in material-heavy industries.
AP (Accounts Payable)	The department responsible for processing vendor invoices and payments.
OCR (Optical Character Recognition)	Technology used to scan and extract invoice data into systems.
RPA (Robotic Process Automation)	Software automation for repetitive, rule-based tasks.
SAC (Service Accounting Code)	Classification code used for services under GST.
HSN (Harmonized System of Nomenclature)	Classification code used for goods under GST.
TDS (Tax Deducted at Source)	Tax withheld by the payer before making a payment, similar to WHT.
WHT (Withholding Tax)	Tax deducted at source in countries outside India.
SOX (Sarbanes-Oxley Act)	U.S. law ensuring internal controls and financial reporting integrity.
2-Way Match	PO and Invoice matched (quantity and price).
3-Way Match	PO, Invoice, and GRN matched.
4-Way Match	PO, Invoice, GRN, and Quality Inspection matched.
Tolerance Limit	Acceptable deviation between PO, invoice, or delivery during validation.
DoA (Delegation of Authority)	Matrix defining approval levels based on transaction values.
CAPEX	Capital Expenditure: Investment in long-term assets.
OPEX	Operating Expenses: Day-to-day running costs of the business.
DPO (Days Payable Outstanding)	Metric showing how long a company takes to pay suppliers.
Vendor Master	Central record of vendor data for procurement and payment purposes.
Debit Memo	Document issued to adjust (increase) payable or receivable balances.
Credit Memo	Document issued to adjust (reduce) payable or receivable balances.
Retention	Amount withheld from payment until contract deliverables are met.
Prepayment	Payment made to a vendor before receiving goods/services.
Accrual	Expense recorded before invoice receipt to reflect proper financial period.
Prepaid Expense	Advance payment for services to be used over time (e.g., insurance).
One-Time Vendor	Vendor used for a single transaction, often in emergencies.
Segregation of Duties (SoD)	Internal control principle: divides responsibilities to reduce fraud risk.

Clear P2P Playbook Guide

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Glossary of Key Terms (Procure-to-Pay)