Lesson 3 of 5
Procure-to-pay document flow
7 min
Contoso buys 500 rotors CMC-RTR-200 from its supplier for plant 1710, through purchasing organization 1710. The procure-to-pay chain looks different from order to cash, but the idea is identical: each step is created with reference to the one before.
- Purchase requisitionInternal request: MRP or a user says "we need 500 rotors"
- Purchase orderCommitment to the supplier: price, quantity, delivery date
- Goods receiptMaterial document increases stock; journal entry posts inventory and GR/IR
- Supplier invoiceInvoice checked against PO and receipt; journal entry clears GR/IR and creates the payable
- PaymentPayment run pays the supplier; clearing entry closes the payable
The purchase order history
Where sales uses a document flow tree, purchasing's main tool is the purchase order history. Display the PO with ME23N, open the item details and choose the Purchase Order History tab. It lists every goods receipt and invoice posted against that item, with quantity, amount, posting date and document number. Double-click a document number to open the material document or the invoice. In Fiori, the Manage Purchase Orders app offers a process flow view of the same history.
| Line in PO history | Contoso example | What it tells you |
|---|---|---|
| Goods receipt (movement type 101) | 300 pieces, material document 5000001876 | Stock received against the PO item |
| Goods receipt (movement type 101) | 200 pieces, material document 5000001902 | A second, partial receipt |
| Invoice receipt | 500 pieces, supplier invoice 5105600099 | The supplier billed the full quantity |
| Totals | GR 500 / IR 500 | Received and invoiced quantities match |
Reading a purchase order history.
Quantities and values: the three-way match
The purchase order history is where you see the three-way match in action: what was ordered (PO), what was received (goods receipt) and what was billed (invoice). If the supplier invoices 500 rotors but only 300 have been received, invoice verification will typically flag a quantity variance and may block the invoice for payment, depending on tolerance settings. If the invoice price differs from the PO price beyond tolerance, you see a price variance block.
The GR/IR clearing account holds the difference between what has been received and what has been invoiced. A goods receipt credits GR/IR; the matching invoice debits it. When quantities and prices match, the account nets to zero for that PO item. When they don't, the balance tells finance something is waiting: goods received but not invoiced, or invoiced but not received.
| Situation | GR quantity | IR quantity | What you see | What it means |
|---|---|---|---|---|
| Fully matched | 500 | 500 | GR/IR nets to zero; invoice free for payment | Process complete up to payment |
| Received, not invoiced | 500 | 0 | GR/IR credit balance | Waiting for the supplier's invoice |
| Invoiced, not received | 300 | 500 | Quantity variance; invoice may be blocked | Check with receiving before paying |
| Price difference | 500 | 500 at a higher price | Price variance; invoice may be blocked | Buyer approves or rejects the difference |
Payment closes the loop
Suppliers are usually paid by the automatic payment program (F110 in SAP GUI, Manage Automatic Payments in Fiori). The payment creates a journal entry that clears the open supplier item. The PO history does not show the payment, so for the last link you move to finance: display the supplier invoice's journal entry and check whether it is cleared and by which clearing document.
What would you do?
Contoso's supplier invoice for 500 rotors is blocked for payment. The buyer says "but we ordered 500". The PO history shows one goods receipt for 300 pieces. What is the correct conclusion?
- Procure to pay: purchase requisition, purchase order, goods receipt, supplier invoice, payment.
- Use the Purchase Order History tab in ME23N (or the Manage Purchase Orders process flow) to see receipts and invoices.
- The three-way match compares ordered, received and invoiced quantities and prices.
- GR/IR clearing balances show receipts waiting for invoices or invoices waiting for receipts.
- Payment status lives in finance: check that the invoice item is cleared.
Check your understanding · not graded
Lesson check
1. Where in ME23N do you see goods receipts and invoices posted against a PO item?
2. What does the three-way match compare?
3. A goods receipt posts to which clearing account?
4. Where do you confirm the supplier was actually paid?