The Procure to Pay and Asset Acquisition to Retirement Process Flows

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Time to unlock your finance team’s digital potential! Join Lois Houston and Nikita Abraham, along with Sr. Principal ERP Learning Strategist David Barnacle, as they discuss the Procure to Pay process flow, an integral financial process that integrates purchasing with accounts payable activities.   They also talk about the Asset Acquisition to Retirement process flow, which includes all the main activities that occur during the life of an asset, right from acquiring it all the way to disposing it at the end of its life.   Oracle MyLearn: https://mylearn.oracle.com/ Oracle University Learning Community: https://education.oracle.com/ou-community LinkedIn: https://www.linkedin.com/showcase/oracle-university/ X (formerly Twitter): https://twitter.com/Oracle_Edu   Special thanks to Arijit Ghosh, David Wright, Radhika Banka, Parvathy Narayan, and the OU Studio Team for helping us create this episode.   --------------------------------------------------------   Episode Transcript: 00:00 Welcome to the Oracle University Podcast, the first stop on your cloud journey. During this series of informative podcasts, we’ll bring you foundational training on the most popular Oracle technologies. Let’s get started. 00:26 Lois: Hello and welcome to the Oracle University Podcast. I’m Lois Houston, Director of Innovation Programs with Oracle University, and with me is Nikita Abraham, Principal Technical Editor. Nikita: Hi everyone. In our last episode, we looked at Invoice to Cash, which is the first business process within the Oracle Cloud Financials Business Process Model. Invoice to Cash refers to everything from the moment a receivable invoice is created until the customer's receipt is settled and reconciled with the bank statement. If you missed that episode, do go back and give it a listen. 01:01 Lois: Today,  David “Barney” Barnacle, our Sr. Principal ERP Learning Strategist is back on the podcast to tell us about the next two business processes, Procure to Pay and Asset Acquisition to Retirement. Nikita: Hi Barney! Thanks for being back with us. So, what is the Procure to Pay process? 01:20 Barney: Hi Niki. Hi Lois. Good to be here. Let’s focus on Procure to Pay or P2P for short, which is an integral financial process within any organization. It integrates purchasing with accounts payables activities and involves a series of tasks. These could include placing a purchase requisition or a purchase order, receiving and inspecting the delivered goods or services, capturing the supplier invoices, which is the company’s liability to the supplier, matching the unit quantity and price to the original PO, calculating the relevant taxes or withholding taxes, approving the charges for final payment by the company, and finally, recording the bank statement lines with all payments made to suppliers or employees. 02:04 Barney: Oracle Fusion Cloud: ERP's capacity to use cutting-edge technologies for effective operations is what distinguishes it from the competition. The true value is in the automation, which helps enterprises improve processes, increase efficiency, and get the latest insights and alerts.  Let me give you some examples within P2P. We have something called Intelligent Document Recognition or IDR for short, which is a fully integrated invoice recognition solution. As you know, many suppliers send payables invoices electronically via email. With Oracle’s cloud solution, IDR extracts invoice information from the emailed documents to create invoices and then imports them directly into Payables. Another interesting feature is the ability to calculate the trip distance in mileage expense entry by using the Oracle Maps Cloud service. For mileage expense types, on the Oracle Maps page, you can enter the start location, subsequent stops, and the end location. It’s that easy. 03:09 Lois: Oh wow, that’s pretty cool. I remember having to track my miles manually many years ago. What a nice feature. So, is creating an invoice the beginning of the P2P process?  Barney: No, Lois. Invoicing is not the beginning but just one part of the larger parent P2P process. The P2P process can be broken into three key phases. These phases are set in a repeating loop and fine-tuned and improved with every cycle. The three phases are the Purchasing process, the Receiving process, and finally, the Payment process. 03:46 Barney: During the Purchasing process, purchase requisitions for goods and services are created and approved. Suppliers are evaluated and selected. And then, purchase orders are issued for the required goods and/or services. Next is the Receiving process, where goods and services are received. Receiving documents are then reviewed and logged for the goods. In the final Payment process, which includes the Invoice, Payment, and Reconciliation sub-processes, invoices are received and invoice processing is completed, recording the supplier’s liability. Invoices are reconciled and cross-checked with the original purchase orders and goods receipts or receiving documents. This is called purchase order or receipt matching, and it ensures that the enterprises only pay for goods and services it has ordered and received. Errors are recorded and corrected, and approved invoices are paid, reducing the supplier’s liability. Payments are then reconciled with bank statement lines. 04:47 Nikita: OK. So, there are multiple activities, like purchasing, receiving, and invoicing, which are part of the P2P process. But how do these activities flow with regard to the Oracle Fusion Cloud: ERP application?  Barney: The Procure to Pay process spans multiple departments within an organization. And in the Oracle application, it covers different modules like purchasing, payables, cash management, and general ledger. Demand generation for goods or services can originate in the Manufacturing departments based on planned or actual orders, or by internal employee orders for goods or services that the business requires.  05:23 Barney: This demand gets converted into requisitions within the Purchasing department. Everything from the creation all the way to the authorization of these requisitions is performed within the Purchasing department. Once the requests have been authorized, the buyers or procurement agents consolidate the requests and convert them into a purchasing document, like a purchase order. Next, the process of receiving goods or services against the purchasing document is typically carried out by the employees requesting those goods or services or by the staff at the receiving location. 05:54 Nikita: And a receiving location could be a warehouse, for example, right? So there is a purchasing department processing purchased orders and another receiving department recording the receipt of goods. Barney: Exactly, Niki. And once the goods are received and recorded, the transaction flows into the Payables department within the finance business function. Supplier Invoice to Payment, which comes within the finance business function, touches internal as well as external parties involved with an organization.  06:23 Barney: For example, when talking about the process of expense reimbursement, employees are considered internal parties. In this process, employees record and submit expenses incurred on behalf of the organization and are reimbursed for the authorized items. For an external party, the process of recording invoices against goods or services used by the organization and the subsequent process of making payment to clear these invoices is also a key part of the Procure to Pay process.  For example, organizations purchase assets like printers or furniture, which are recorded as part of the purchasing process. Oracle Assets is a fully integrated solution to track internal products and assets at internal or external sites, while providing the ability to capture financial transactions with back-office automation. 07:10 Barney: And then there is the Treasury department that some companies may call the Cash department, which, at periodic intervals, receives bank statements and reconciles the statement lines with payments made to suppliers. The key focus of the Treasury department is to determine the cash position and to assist in managing the cash forecasting process. These are just some activities of the Procure to Pay process that touch multiple departments within the business. 07:35 Lois: You mentioned expense reimbursement and making payments to external suppliers for goods received. How does this fit into the Oracle Financials Business Process Model?  Barney: As we discussed, P2P involves multiple processes spanning procurement to cash, specifically payables invoice to cash. Let me list out the processes that are aligned with Oracle Financials business processes as part of the P2P process. First, we have the Expense Report to Reimbursement process that deals with getting business expenses reimbursed for employees and contract workers, also known as contingency workers. 08:13 Barney: The Supplier Invoice to Payment process deals with recording liability for purchases made by the organization directly from external parties and paying for those purchases. The Capture Tax process deals with applying transactional tax or withholding taxes based on the information entered in an invoice and invoice line level, and legislative requirements. The Bank Transaction to Cash Position process deals with matching bank statement lines to payments made to suppliers. Accountants working in the Treasury department can prepare the expected cash position based on the expected receipts and payments within that specific period.  08:51 Lois: Each of the Oracle business processes you mentioned seem to be aligned with the general flow of activities in a typical organization. What are the advantages of having such a streamlined P2P process? Barney: A streamlined and automated Procure to Pay process helps organizations remain compliant with supplier-related contractual terms and legislative tax requirements. It also helps them reduce the risk of fraud with risk migration controls in place and automation within the process.  09:18 Barney: It results in better supplier management in terms of sourcing and evaluating suppliers, and monitoring and controlling supplier invoice aging, resulting in timely payments being made to suppliers. The ability to capture supplier invoices from multiple channels, including scanning and online submission by suppliers to enable batch processing of payments, results in cost reduction for an organization and saves hours that would have been spent manually processing invoices and payments. Most importantly, a streamlined Procure to Pay process provides the ability to capture data at each stage, which helps with future decision-making. 09:56 Nikita: What are the job roles associated with the Procure to Pay business process? Barney: There are a few key job roles in the P2P business process. There’s the employee job role, which identifies the person as an employee who can create a requisition and an expense report. The Procurement Agent job role is responsible for transactional aspects of procurement processing. The Expense Audit job role reviews and audits expense reports daily to ensure compliance with the company's reimbursement policy. The Accounts Payable Specialist job role enters invoices, ensuring accuracy, uniqueness, and completeness, and matches invoices to the correct purchase orders or receipts, all while making sure that the invoices comply with company policy. The Accounts Payables Supervisor job role oversees the activities of Accounts Payable Specialists, initiates and manages payment runs, and resolves non-data entry holds. And finally, the Cash Manager job role protects and develops the company's liquid assets, maximizing their use and return to the organization. 10:58 Lois: For an organization to have an optimized Procure to Pay process, I’m sure they need to track certain key performance indicators, right?  Barney: Yes, and they do. Some of the KPIs that are tracked for the P2P process are Expenses vs. Budget, Invoice Payment Days, % Discount Taken, Time to Settlement, Time to Reconcile, and Payables Overdue Invoices. 11:20 Lois: Barney, earlier you spoke about how easy it is to raise expenses and use the Maps functionality. Are there other emerging technologies used by the ERP application in the Procure to Pay process? Barney: Yes Lois, Oracle Fusion Cloud: ERP uses the latest emerging technologies like artificial intelligence, digital assistants, and image scanning in different areas of the Procure to Pay process. Adaptive Intelligence models are used in the Payables module to calculate and recommend discounts for single payments. Intelligent Document Recognition is used to scan and automate the invoice creation process in Payables, incorporating the required reviews and approvals. Within the Expenses module, Digital Assistants are used to punch in expenses and submit them automatically. You can also click photos of receipts and process them to input the required expenses.  12:16 Working towards an Oracle Certification this year? Grab all the help you can get. Attend a cert prep live event in the Oracle University Learning Community. And once certified, don’t forget to join our exclusive forum for Oracle certified users.  If you’re already an Oracle MyLearn user, go to MyLearn to join the community. You will need to log in first. If you’ve not yet accessed Oracle MyLearn, visit mylearn.oracle.com and create an account to get started.  12:47 Nikita: Welcome back. Barney, you mentioned that Payables is one of the starting points to capture or track assets in the application. Can you help us understand how this is built in to Oracle Fusion Cloud? Barney: In the Oracle Financials Business Process Model, Asset Acquisition to Retirement is a key process that covers all the main activities that occur during the life of an asset, anything from acquiring it to disposing it at the end of its useful life. There are many things a business will need to do with assets. Capture asset acquisition, record financial transactions, track asset movement for reporting and regulatory purposes, and so on. We can manage these assets and simplify fixed asset accounting tasks with the help of Oracle Fusion Assets. It has the ability to record leased assets in line with the requirements of the two new accounting standards. 13:37 Barney: Oracle Assets integrates with other modules like Payables, Subledger Accounting, and Projects. You can add assets and cost adjustments directly into Assets from invoice information in Payables. The Create Mass Additions for Assets process sends valid invoice line distributions and associated discounts from Payables to the Mass Additions interface table in Assets. You can then review the mass addition lines in Assets and determine whether to create assets from them. 14:03 Nikita: So, what are the different stages in the Asset Acquisition to Retirement life cycle? I’m sure the first one has to be acquiring the asset. Barney: You’re absolutely right there, Niki. The Asset Acquisition to Retirement life cycle starts with the Asset Acquisition stage. A business can acquire an asset through the Procure to Pay life cycle and record the asset in the asset register. An asset can be acquired by purchasing it, leasing it, constructing/developing it (i.e. by the use of Oracle Fusion Projects), or by mergers or acquisitions. And by acquiring assets, we mean capturing and recording the purchase of assets from all business locations. 14:42 Barney: The next stage is Monitoring and Tracking. Once an asset has been created and added to the asset register, you can perform various activities during the asset’s life cycle. These activities could be changing its category or financial details, transferring assets, i.e. from locations, or running or changing depreciation. Any finally, we have Retirement. When you sell an asset, or an asset is lost, or the asset reaches the end of its useful life, you must remove it from the asset register. 15:14 Lois: And before we let you go for today, remind us – what job roles perform the functions related to this life cycle, Barney? Barney: There are two main job roles involved in this process. One is the Asset Accountant, the basic user who performs all functions in the asset management module. Then there’s also the Asset Accounting Manager who has much of the same access as the asset accountant, along with extra access in terms of reporting and running accounting processes. 15:40 Nikita: I think we’ve discussed these two important Oracle business processes quite thoroughly. Thank you so much, Barney, for taking us through them.  Barney: Thanks for having me! Lois: Yes, thanks, Barney. This is a great introduction. Next week will be our final episode on the Oracle Financials Business Process Model, where we’ll cover the Accounting Transformation and Budget to Report business processes. And don’t forget to head over to mylearn.oracle.com to learn more about these processes and get certified. Until next time, this is Lois Houston… Nikita: And Nikita Abraham, signing off! 16:13 That’s all for this episode of the Oracle University Podcast. If you enjoyed listening, please click  Subscribe to get all the latest episodes. 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