Procure to pay (MM)

Procure to pay in SAP follows the business process step by step, with a transaction (and a Fiori app) for each:

Step	T-code	What happens	Finance posting
Purchase requisition	ME51N	Internal request, often created by MRP	None
RFQ and quotations (optional)	ME41, ME47, ME49	Invite bids, enter quotes, compare prices	None
Purchase order	ME21N	Binding order to the supplier	None (a commitment)
Goods receipt	MIGO, movement type 101	Stock increases	Dr Inventory / Cr GR/IR clearing
Invoice verification	MIRO	Three-way match against PO and goods receipt	Dr GR/IR / Cr Supplier
Payment	F110	Payment run pays due, unblocked invoices	Dr Supplier / Cr Bank

The GR/IR clearing account is the bridge: the goods receipt credits it and the invoice debits it. If they don’t balance, something was received but not invoiced, or invoiced but not received, and old GR/IR balances are a classic audit question.

At invoice verification, SAP compares price, quantity and dates against tolerances (set in OMR6). An invoice outside tolerance is blocked for payment, and someone must release it (MRBR) once the cause is fixed. The payment run (F110) skips blocked invoices.

Master data does a lot of quiet work: purchasing info records remember supplier prices, source lists restrict allowed suppliers, and the material master’s valuation class decides which inventory account a goods receipt hits.

What shapes a purchase order

• Document type: NB for a standard purchase order, UB for a stock transport order between plants.
• Item category: standard, or special ones such as K (consignment), L (subcontracting), S (third-party) and D (service).
• Account assignment: stock items need none; items for consumption carry one, such as K for a cost center, F for an order or A for an asset, so costs go to the right place.
• Release strategy: approval rules by value, purchasing group or other criteria. Requisitions and orders can be released individually (ME29N for orders) or collectively (ME28).
• Sources: info records supply prices and conditions, source lists restrict the allowed suppliers, and contracts or scheduling agreements set long-term terms.

The postings, with their keys

The PO was for 100 units at 25.50. The first goods receipt brought 80, crediting GR/IR with 80 × 25.50 = 2,040. The invoice for 100 debited GR/IR with 2,550. The account showed a 510 debit, the value of the 20 units invoiced but not yet received, until the second receipt credited the remaining 510.

Tolerances and blocks

Tolerance keys in OMR6 set limits for each kind of variance at invoice verification, such as PP (price), DQ (quantity) and DW (date). An invoice outside a limit posts but is blocked for payment. The payment run (F110) skips it until someone releases it with MRBR, either after fixing the cause or after deciding the variance is acceptable. In Global Bike, Round 1’s invoice was blocked by the date tolerance and Round 2’s by quantity.

Goods can also arrive into blocked stock (movement type 103) or quality inspection stock and be released later (105), so receiving and accepting are separate steps when needed.

Special procurement processes

• Consignment: the supplier’s stock sits in your warehouse; you own it only when you withdraw it. Liabilities are settled periodically from withdrawals (MRKO).
• Subcontracting: you send components to a supplier who processes them and returns a finished item. Components move to stock provided to the vendor (movement type 541) and are consumed when the finished item is received.
• Third-party (drop-ship): the supplier ships directly to your customer; often triggered from a sales order.
• Stock transport orders: move stock between your own plants, in one step or two (goods issue into transit, then goods receipt), optionally with deliveries and shipping documents.

Outline agreements

• Contracts (ME31K) fix prices or values over a period; release orders draw against them.
• Scheduling agreements (ME31L) set delivery schedules for repetitive supply, common in automotive and process industries.

With source lists, info records and agreements in place, approved requisitions can be converted to purchase orders automatically (ME59N).

Evaluated receipt settlement

With ERS, the buyer doesn’t wait for a supplier invoice: the system creates the invoice from the goods receipt and the agreed price (MRRL). It removes most invoice mismatches and speeds up payment, but it needs accurate prices in the system and suppliers who agree to it.

Keeping GR/IR clean

At period end, GR/IR balances are analysed and old items investigated: goods received but never invoiced, invoices for goods never received, small differences that can’t be traced. Small, explained differences can be cleared with MR11, and balances are reclassified for the balance sheet. Old, unexplained balances are a classic audit finding, so most companies review them monthly.

Common P2P problems

• A requisition isn’t converted: no source of supply, or the source list blocks the supplier.
• A goods receipt fails: no open quantity, the PO isn’t released, or the posting period is closed.
• An invoice is blocked: variances beyond tolerance, or GR-based invoice verification with the receipt missing.
• Wrong prices: outdated info records or conditions copied into new orders.
• Duplicate invoices: the duplicate-invoice check depends on reference numbers being entered consistently.