Business Processes 101

Business Processes or Transaction Cycles

• Inventory to Deliver, Plan to Produce, Hire to Retire, Order to Cash, Procure to Pay, Record to Report, Close, Consolidate and Report, Acquire to Dispose are some examples of business processes.

Procure to Pay

• It describes the entire process from purchasing goods/services from suppliers to paying for them.
• Includes:
  • Identifying the need for goods or services
  • Supplier selection
  • Purchase order creation
  • Invoice receipt and verification
  • Invoice approval for payment
  • Payment of the invoice
  • Record-keeping and reporting

Inventory to Deliver

• Managing goods flow from warehouse/distribution center receipt to delivery to the customer.
• Includes:
  • Defining and managing warehouse operations
  • Processing inbound goods
  • Managing inventory quality
  • Maintaining inventory levels
  • Managing inventory costs
  • Recording and controlling costs
  • Processing outbound goods
  • Managing freight and transportation
  • Controlling vendor-managed inventory and consignment inventory
  • Analyzing warehouse performance

Plan to Produce

• A group of processes supporting planning and execution of production.
• Connects to Inventory to Deliver:
  • Inventory to Deliver → Picking of Raw Materials
  • Plan to produce → Production Process
  • Inventory to Deliver (again) → Put-away of finished goods
• Includes:
  • Defining production strategies
  • Planning production operations
  • Running production operations
  • Outsourcing production orders - can connect to Procure to Pay
  • Controlling production quality
  • Tracking production costs

Acquire to Dispose

• Managing owned and leased assets from acquisition to disposal.
• Includes:
  • Planning and Budgeting of assets
  • Acquisition of the assets
  • Managing internal assets - including tracking asset usage, ensuring the assets and optimizing asset performance.
  • Managing and reporting on asset financials - includes depreciation, depletion
  • Repair and maintenance of internal assets
  • Retiring and disposal of assets

Record to Report (R2R)

• Also called the financial recording and close process.
• Involves collecting, analyzing, and reporting financial data to reflect company’s financial performance accurately.
• Includes:
  • Defining the ledger and currency policies
  • Managing budgets
  • Maintaining and managing cash and bank transactions
  • Recording financial transactions
  • Closing financial periods
  • Reporting and analyzing financial and cash flow
  • Complying with tax, audit, and regulatory requirements
  • Managing fund accounting

Close, Consolidate and Report

• Accrues and generates key info for internal/external parties to make strategic decisions and measure success.

Consolidation and Close

• Collecting and combining data from different activities, departments, or business activities so they are reflected in financial statements such as income statement, balance sheet, and cash flow statement.
• Takes place at the end of an accounting period: end of the month, end of the quarter, end of the year (either calendar or fiscal year).

Test your knowledge on various business processes including Procure to Pay and Inventory to Deliver. This quiz covers the key steps involved in managing procurement and inventory flow, essential for effective operations in any business. Assess your understanding of these critical cycles in business management.