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Procure to pay end-to-end overview

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Applies to: Dynamics 365 Commerce, Dynamics 365 Customer Voice, Dynamics 365 Field Service, Dynamics 365 Finance, Dynamics 365 Project Operations, Dynamics 365 Supply Chain Management, Microsoft Supply Chain Center

This article describes the procure to pay end-to-end business process flow and its relationship to other business processes that can be used within Dynamics 365.

Procure to pay process relationship

The following diagram shows the relationship of other processes for the procure to pay process.

Business process relationships with upstream and downstream processes that are explained in the next paragraphs.

The upstream process for the procure to pay processes are:

  • Concept to market

    This end-to-end process, which covers the process of creating services, is required to determine which services should be procured in the procure to pay process by the organization.

  • Design to retire

    This end-to-end process, which covers the process of creating new tangible products, is required to determine which products should be procured in the procure to pay process by the organization.

  • Forecast to plan

    Organizations need to create a supply plan in Dynamics 365 supply chain management to procure materials and services to meet the internal and external customer needs.

  • Order to cash

    Demand from sales orders are used by the supply plan to procure the requested materials or services. This could also include related components of an ordered finished good being produced. Additionally, in a direct delivery sales model, the sales order can trigger the creation of a purchase order with the supplier.

  • Project to profit

    Materials and services included to support an ongoing project will require a procurement process to be initiated by the procure to pay process.

  • Acquire to dispose

    Many assets require procurement of materials and/or services to create an asset that is usable in the organization.

  • Plan to produce:

    Organizations need to procure materials for use in production before the production process begins. Procurement of materials and services are required during the subcontracting or contract manufacturing processes when an outside vendor is used in the production process.

  • Service to cash

    Organizations need to procure materials or services to support internal and external activities such as maintenance, installation, or warranty services.

The procure to pay end-to-end process is broken down into the following component business process areas:

  • Develop procurement and sourcing strategies

  • Define procurement catalogs

  • Manage vendor relationships

  • Procure materials and services

  • Process vendor invoices

  • Issue and settle vendor payments

  • Process vendor rebates and incentives

Learn more at Procure to pay business process areas.

The following list displays the downstream business processes:

  • Forecast to plan

    Material forecasts are used during the forecast to plan business process to ensure needed materials are purchased to support supply and demand needs. Once the plan is reviewed, the materials are purchased based on the inventory quantities requested.

  • Order to cash

    Materials and services are planned and purchased to fulfill orders that arrive within the order to cash business process. It would include orders where materials are shipped directly from the vendor to the end customer.

  • Project to profit

    Purchased materials and services to support ongoing projects will be used within the project to profit business process.

  • Acquire to dispose

    Purchased assets are tracked within the acquire to dispose business process.

  • Plan to produce

    Materials purchased are used during the plan to produce business process when producing finished goods. It may also include materials and services purchased during the subcontracting or contract manufacturing processes when an outside vendor is used in the production process.

  • Service to cash

    To support the service to cash business process, purchased materials or services support internal and external activities such as maintenance, installation, or warranty services.

  • Inventory to deliver

    Once materials are purchased, the materials are managed in the inventory to deliver business process that include the receiving and material movements processes.

  • Record to report

    After the materials and services are purchased, the record to report business process will be used to record any invoices, vendor debits and chargeback, and vendor payments.

There are product-specific capabilities that interact with the procure to pay processing including, but not limited to:

  • Vendor collaboration

    This optional module in Dynamics 365 provides a portal to interact with vendors on purchase orders, RFQ (request for quotes), consignment inventory, invoices, and other main data. The option is available if EDI (Electronic data interchange) isn't used for procurement.

  • Vendor onboarding

    Vendors can request to onboard through a customer-hosted site that allows anonymous access. The vendor fills in request information that is then imported as a prospective vendor request in Dynamics 365 Supply Chain Management for review. Out-of-the-box workflows allow the customer to control the vendors that are approved for onboarding and created within the vendor master. Once the vendor is created in Dynamics 365, the vendor can be set up to use the vendor collaboration portal as mentioned above.

  • Microsoft Supply Chain Center

    You can synchronize your data from first party applications or third-party applications to the Dataverse to use advanced analytics capabilities for monitoring your supply chain.

  • Purchasing policies

    Purchasing policies allow your organization to have a set of rules around the requisition and purchasing processes while using the built-in workflow capabilities.

  • Quality management

    Dynamics 365 Supply Chain Management provides a framework to capture nonconforming materials through product testing. Users can set the timing for when to generate a quality order for testing before materials are released for consumption. With the gathered data surrounding the item sampling or tests completed, results can assist with corrective action, should it be needed.

  • Dynamics 365 Finance Invoice Capture

    This solution can automatically create vendor invoices using OCR to translate the received vendor invoice into an electronic document for processing. It's helpful in improving accuracy and processing times while reducing manual intervention.

  • Advanced warehouse management (mobile device)

    During the materials receipt process in the Inventory to deliver end-to-end scenario, you can use warehouse management processes to automate and simplify the inventory processes on the warehouse floor with mobile devices.

Procure to pay business process flow

The following diagram shows the high-level flow of the procure to pay business process. Each solid rectangle on the diagram represents an end-to-end business process area. The diagram shows the subprocesses for the end-to-end business process in this article. The arrows on the diagram show the flow of the business process in a typical organization. If a subprocess can lead to more than one other subprocess, the parallel subprocesses are shown as branches.

Diagram of the procure to pay business process area map, showing the connections between various business processes.

The following steps are illustrated in the procure to pay end-to-end business process flow diagram.

  1. Start

  2. Procure to pay end-to-end process

    1. Parallel subprocesses include the following:

      1. Define procurement catalogs

      2. Define procurement and sourcing strategy

      3. Manage vendor relationships

    2. Procure materials and services

      Parallel branches from this subprocess are acquire to dispose, plan to produce, order to cash, forecast to plan, service to cash, and project to profit

  3. Receive item/service required?

    1. If yes, then connect to inventory to deliver

    2. If no, then connect to process vendor invoice

  4. Process vendor invoices

    Parallel branch from this subprocess is record to report.

  5. Issues and settle vendor payments

    Parallel branch from this subprocess is record to report.

  6. Process vendor rebates and incentives

    Parallel branch from this subprocess is record to report.

  7. End

Parallel branches from Start include the following list:

  • Concept to market connects to Define procurement catalogs

  • Design to retire connects to Define procurement catalogs

  • Forecast to plan connects to Procure materials and services

  • Order to cash connects to Procure materials and services

  • Project to profit connects to Procure materials and services

  • Acquire to dispose connects to Procure materials and services

  • Plan to product connects to Procure materials and services

  • Service to cash connects to Procure materials and services

Next steps

If you want to implement Dynamics 365 solutions to assist with your procure to pay business processes, use the following resources and steps to learn more.

  1. Define the goals and objectives of implementing a procure to pay technology solution. Learn more at Implementation strategy.

  2. Define the business process scope of your project. Learn more at Process-focused solution.

  3. Request a demo or get a free trial of Dynamics 365 solutions for the procure to pay process. Learn more at Request a demo.

  4. Procure to pay business process areas

You can use the following resources to learn more about the procure to pay process in Dynamics 365.