Procure to Pay Process (Effective Way with New features and Power Automate) in Microsoft Dynamics 365 Finance and Operations

In this blog, I am going to talk about very famous topic in any ERP including D365. This is also a basic question in any interview for SCM profile.

Yes, you are right it is procured to pay. SO, what is new I am going to explain in this whole process, I will try put some “Quick Tips” which we should consider implementing this effectively

Procure to pay process talks about how any purchase is initiated and executed completely to end of the life cycle by paying to the vendor. To Explain this complete process, I have prepared the business process flow:

Now, after seeing this process flow, here are the major documents which gets created through out the life cycle depends on the process.

1. Purchase Request (PR)
2. Request for quotation (RFQ)
3. Purchase Order (PO)
4. Product receipt (GRN)
5. Purchase order invoice
6. Vendor Payment

So, as you can see in above process flow it really depends up on business process that how the purchase order should be created. You can create Purchase order in following ways:

1. PR > RFQ > PO (This process is used when purchase team wants to finalize prices using RFQ process)
2. PR > PO (This process is used when purchase team has price agreement with vendor but want to take through PR process)
3. RFQ > PO (This process is used basically for big purchases which starts with RFQ process initiated by purchase team)
4. Direct PO (This process is used basically for big purchases when purchase team has all price and vendor information agreed before)

So, depends on business scenario, system can be configured, and process can be designed.

In this blog, we will take longest route From PR > RFQ > PO. So, let us start:

Pre-requisites: You need to have following setups completed:

• Product master
• Site/Warehouse Master
• Vendor master
• Purchase requisition permissions (requestor and preparer)
• Purchase requisition workflow (Mandatory)

Step-1: Create PR

Procurement and Sourcing > All Purchase requisition > Create Purchase requisition > enter all required details > Submit for approval

***Important Note: Please use Power Automate for defining PR workflow using business event, this will enable approvers to approve PR directly through Email. No need to login to D365

https://docs.microsoft.com/en-us/dynamics365/fin-ops-core/dev-itpro/business-events/how-to/how-to-workflow

Note: If Price exists than we can approve PR and create Po directly with step -6

Step-2: Create RFQ

Procurement and Sourcing > All Purchase requisition Select Purchase requisition > Create RFQ

Note: PR should be in “In review” status to create RFQ from PR

Step-3: Send RFQ to Vendor

Procurement and Sourcing > request for quotation > Open request for quotation > Header View > Add vendors > Click Send

Step-4: Enter Vendor Reply

Procurement and Sourcing > request for quotation > Sent request for quotation > Manage replies > Select vendor> Edit RFQ > Enter Details > Submit (repeat this for all vendors selected in RFQ)

Step-5: Compare replies and Finalize RFQ

Procurement and Sourcing > request for quotation > Received request for quotation > Compare replies > Select vendor with selected line> Accept > Ok (System will automatically reject the other vendor reply)

Note: RFQ can also be directly created for creating > PO or purchase agreement

Step-6: Final PR Approval and Release approved PR

Procurement and Sourcing > All Purchase requisition > Release approve PR > Select PR line/lines for which PO need to be created > Click on New PO > Select vendor if vendor is not selected in PR

Step-7: Confirm PO

Procurement and Sourcing > All Purchase orders > Open PO > Confirm

***Important Note: Please use Power Automate for defining email notification using business event on confirming PO and sending PO copy to vendor.

https://docs.microsoft.com/en-us/dynamics365/fin-ops-core/dev-itpro/business-events/how-to/how-to-workflow

Note: PO can be sort closed, selecting line > update reminder

Note: PO workflow can be setup by enabling change management

Step-8: Product receipt

Navigate to: Purchase order Receipt and follow up workspace > Post product receipt > Select PO to be received > Enter receipt Quantity > Number etc… > Ok

Note: Encourage users to use workspace for individual tasks, do not use all purchase order form for product receipt.

Note: There is one “feature in update 35” which enables the “Ordered and remaining Quantity” field on Product receipt form which will help user to know what is ordered, received, and remaining.

Note: You can have over/under delivery , in case of over delivery system will pick up PO unit price for additional quantity.

Read my blog for accounting entries posted at the time of product receipt:

https://exploredynamics365.home.blog/2020/05/09/inventory-transactions-posting-profile-setup-part-1-in-dynamics-365-finance-and-operations/

Step-9: Post Vendor Invoice

Navigate to: Vendor invoice entry workspace > product receipt > Select product Receipt > Invoice Now > Enter all the details and validate all information on Invoice form > Post

Note: If you are using Vendor invoice workflow, there is new feature which can prohibit submission of workflow if the invoice number is already exists in posted invoice.

Note: New feature, Prohibit submission to workflow when the invoice total and registered invoice total

Note: New feature, let invoice be submitted to workflow with incomplete or incorrect accounting distribution

Note: new feature, prohibit workflow submission if there are unallocated charges on invoice

Read my blog for accounting entries posted at the time of invoice:

https://exploredynamics365.home.blog/2020/05/09/inventory-transactions-posting-profile-setup-part-1-in-dynamics-365-finance-and-operations/

That is, it for this blog, I know this is bit long one, but this covers most of the activities in “P2P” process. This will help you in your implementation as well as in your interview.

Thank You!!! Keep reading and sharing with your network.