D365F&O Procure to Pay Process

Hi Everyone,

Hope you all are doing great and keep on exploring the new release D365F&O.

Luckily got some time and sharing this blog post regarding the Procure to Pay Process in D365F&O.

This blog post will cover the following topics

• Create a new Vendor
• Create a Purchase order for the Vendor 
• Generate and Post the Product receipt for the Purchase order
• Generate and Post the Invoice for the Purchase order
• Create the Invoice Journal
• Generate and Post the Vendor payments 

Create a new Vendor 

The new vendor will be created from the Procurement and Sourcing or Accounts payable module. The Procurement manager will create the vendor and enter the Vendor code, vendor name, organization type, vendor group and contact information.   

Enter the currency, delivery terms, mode of delivery and sales tax group for the vendor. The information entered in these fields is the default information for the Vendor. The same will be populated automatically for the Purchase order and Vendor invoice journal. 

Create a Purchase order for the Vendor 

Select the vendor account, site, warehouse and accounting date for the purchase order. 

Note: The default information for the vendor will appear automatically for the purchase order. 

Select the Project for the Purchase order

Select the project ID, orderer name, and Pool for the purchase order. 

Enter line item in the Purchase order

In the purchase order line section, enter the line item, quantity, unit price and if required enter the discount.

Once the details are entered, confirm the purchase order. After the purchase order confirmation, the business user can take the purchase order print.

Note:  It's possible to print the pro forma purchase order before purchase order confirmation. 

Generate the Product Receipt for Purchase order

Only after the confirmation, the business user can able to post the product receipt. 

Post the Product Receipt for Purchase order

Enter the product receipt number, date and document date. Press ok to post the product receipt. 

Once the product receipt posted the status of the purchase order become "Received". 

Generate and Post the Invoice for Purchase order

The next step is to generate the purchase order invoice. Before posting the vendor invoice enter the invoice number and date for the invoice. Once the purchase order invoice posted, the purchase order status will become "Invoiced".

Note: In order to reverse the posted invoice, the business user needs to generate the credit note. The credit note will generate and post the reversal for receiving an invoice.  

Create Vendor Invoice Journal

The business user can directly create the vendor invoice without creating the purchase order. 

Path: Accounts payable> journals> invoice journal 

First, create the new journal in the invoice journal form. Enter the description for the invoice journal. 

In the invoice journal, the business user will select the vendor code, invoice date, invoice number credit amount and offset account for the transaction. The offset account will be debited by the system.  

Make sure to select the correct sales tax group and item sales tax group. Also, you can check the calculated sales tax amount. 

Once all the details are entered, validate and post the invoice journal. 

Vendor Invoice Journal Print

The business user can take the print out for the invoice journal before and after posting the invoice journal. 

Vendor Settlements or Payments for Invoice Journal 

Once the invoice journal posted, now the transaction is available in "Open vendor transactions" form. Payment journal will be used to perform the settlement for the vendor invoices. 

Path: Accounts payable> journal> payment journal

Create the new payment journal and enter the description for the journal. 

In the Vendor Payment Journal Lines, select the vendor and click the "settlement" button to select the vendor invoice for settlement. 

In the settle transaction form, mark the transaction for settlement and press ok. 

Make sure to enter the offset account type and offset account. Once all the details entered validate and post the vendor Payment journal.

Note: After posting the payment journal, this transaction is now available in "closed transactions form". You can view all the closed transactions from the vendor master.

The business user can view the print out for the payment journal before and after posting the payment journal. 

Conclusion 

• The Procurement team will create the purchase order, after the approval the purchase order needs to be confirmed by the buyer or the procurement manager. 
• The warehouse team needs to receive the purchase order, once all the items in the purchase order received, the PO status will be "Received".
• Finance team needs to post the invoice for the purchase order. 
• Vendor settlement will be performed against the purchase order invoice.

If you have any question or feedback feel free to share. 

Thanks,

Ali Danish

Microsoft D365F&O Senior Consultant