Lab 02 · Procure to pay

Scenario: UAE Trading orders 10,000 cartons from an international supplier. The supplier invoices in USD; goods arrive at the UAE distribution centre; freight and customs become part of the inventory cost.

The flow

1. Create or review the supplier, payment terms, currency, tax treatment, and supplier item codes.
2. Raise a purchase request with quantity, requested date, warehouse, and responsible cost centre.
3. Approve the request according to the company's authority matrix.
4. Create the purchase order in USD and record the agreed exchange-rate policy.
5. Receive the goods: count cartons, record batch/expiry where applicable, and quarantine damaged units.
6. Record freight, insurance, customs, and other landed-cost components using the approved allocation rule.
7. Match supplier invoice to order and receipt. Investigate quantity, price, tax, and currency differences instead of overriding them.
8. Post the payable in the company's AED books using the invoice-date rate.
9. Pay from the authorised USD or AED bank account.
10. Reconcile the payment and record any realised foreign-exchange difference according to the accounting policy.

What should change

Event	Inventory	Payable/cash	Evidence
Purchase order	No on-hand change	No posting yet	Approved order
Receipt	Available stock increases after acceptance	Accrual or receipt evidence, depending on configuration	Receipt and variance
Invoice	Cost/tax may update according to policy	Supplier payable increases	Matched invoice
Payment	No stock change	Payable decreases; bank decreases	Bank reference and FX result

Practice variations

• Invoice quantity exceeds receipt: hold and investigate.
• Exchange rate changes between invoice and payment: explain realised FX.
• Damaged batch: quarantine rather than making it available for sale.
• Supplier credit note: reverse the correct cost, tax, and payable effect.
• Purchase in SAR for the Saudi company: keep the local books in SAR and report to the group using the approved translation method.

Consultant deliverable: Draw the order → receipt → invoice → payment state machine and list every approval, permission, audit event, and recovery path.