Part 1
Course reading
Procure-to-Pay (P2P) is the end-to-end flow that turns a business need into a paid supplier invoice. The steps are: purchase requisition, approval, source selection, purchase order, goods receipt, invoice receipt, invoice verification and payment. In SAP these map to ME51N (PR), ME21N (PO), MIGO movement 101 (goods receipt), MIRO (invoice verification) and F110 (payment run).
The three-way match compares three documents before payment: the purchase order (what was agreed: item, quantity, price), the goods receipt (what physically arrived and was accepted) and the supplier invoice (what the supplier is charging). If all three agree within tolerance, the invoice is released for payment. If the invoice quantity is higher than the received quantity, or the price is higher than the PO price, the invoice is blocked for payment and the buyer or warehouse must investigate.
Example: PO for 100 cartons at 5 USD. The warehouse posts a goods receipt for 95 cartons because 5 were damaged and rejected. The supplier invoices 100 cartons. The three-way match shows a quantity variance of 5 cartons, so only 95 x 5 = 475 USD should be paid, or the invoice is blocked until a credit note arrives.
Good P2P control prevents paying for goods never received, duplicate payments and unapproved price increases. Key measures are invoice match rate, number of blocked invoices, average days to clear blocks and on-time payment percentage. Keep the GR/IR clearing account reviewed every month: an open GR/IR balance means goods were received but not invoiced, or invoiced but not received.