P2P, O2C and R2R processes

P2P, O2C and R2R processes are the three chains of work around which most finance software is built. Procure-to-pay (P2P) runs from deciding to buy something to paying the supplier. Order-to-cash (O2C) runs from a customer's order to the money arriving in the bank. A longer version that starts with the sales quote is called quote-to-cash. Record-to-report (R2R) runs from recording each transaction in the books to the monthly financial report. Each chain crosses several departments, which is why software is built around the chain rather than around one team.

Here is how each chain works in general. In procure-to-pay, an employee raises a request to buy something. The purchasing team turns it into a purchase order, the formal order sent to a supplier. The warehouse records the goods when they arrive. The supplier sends an invoice. The accounts team pays it only if the invoice, the order and the goods received all agree. This check is called three-way matching.

In order-to-cash, the customer places an order, often after accepting a quote from the sales team. The order is delivered, an invoice is raised and the customer pays. The accounts team then marks that invoice as paid, and chases the invoices that are overdue.

In record-to-report, every payment and invoice from the other two chains is recorded in the ledger, the company's book of accounts. At month-end, the accounts team checks each account through reconciliation. It then closes the books, adds up the numbers of every company in the group, and produces the reports for the management and the auditors.

Take, for example, a hospital chain buying ₹30 lakh of medical supplies. Its procure-to-pay software holds the request, the order, the goods receipt and the invoice in one place, and releases the payment only when they all match.

Consider a project management app whose customers pay every month. Subscription billing runs its order-to-cash chain: it charges each customer, retries failed card payments and records the revenue.

For instance, a listed company must publish its results within weeks of each quarter's end. Its financial close software runs the record-to-report chain, and tracks every reconciliation and every sign-off.

How are these chains different from the modules of an ERP? An ERP is sold in modules, one for each department: purchasing, sales and finance. A chain runs across those modules. Many problems appear where one department hands work to the next, such as an invoice that purchasing approved but the accounts team cannot match. That is why newer software, including agentic automation, is often sold by chain rather than by department.