Setting Tolerances for Invoice Matching

Setting Tolerances for Invoice Matching Version

This topic discusses:	Links to related topics:
Set tolerances in System Values Set tolerances in vendor records Set tolerances to zero Instruct system not to check tolerances Working with the tolerance fields How the system processes tolerances	Viewing purchase order details Matching invoices and receipts Handling price and quantity exceptions Working with vendor information Setting permission for exception receipts Working with contracts Other Administrator topics: Setting up and maintaining users - Report profiles - Copy user roles Importing vendor data Viewing batch jobs and clearing completed jobs Changing your password Changing your out-of-office status Periodic maintenance tasks: purging obsolete data Scheduling batch jobs Requisition approval processing by cost, commodity code and item type Creating organizations and departments Quick User Role Setup Identifying buyers and set up approver groups
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Overview

Tolerances are limits that you set on dollar differences between invoices and purchase orders. When you match a purchase order with an invoice, you may find a difference between the invoiced amount and the purchase order amount. After accounting for other elements on the invoice (such as shipping costs), the difference may still exist. This difference is a purchase price variance (PPV). The system tests the PPV against the tolerances -- or limits -- that you have set. When the PPV exceeds the tolerance, an exception is generated. You can set dollar tolerances for invoice totals, or for individual line item costs.

You can set a tolerance as a percentage of a total dollar amount, as a total dollar cap, as a percentage of a line item cost, or as a line item dollar cap.

Tolerances that you specify on the System Values panel are used by default. If you wish to use vendor tolerances, you must enter them on the Tolerances tab in the vendor record. You must also "uncheck" the field Use System Tolerances.

Security

The "Administration" role object controls access to setting tolerances. The minimum setting is Modify.

To set tolerances in System Values:

From the main Materials Contents, select Administration > System Values. The System Values list appears, showing current tolerances (if any exist). See Figure 1.

Figure 1 - Tolerances As Set in System Values

Do one of the following:

To create new tolerance settings, click New.
To change current tolerance settings, click the edit icon (or click Menu > Edit) next to the settings you wish to change.
The System Values tabbed panels appear.

Select the Tolerances tab (Figure 2).

Figure 2 - System Tolerances Edit Panel

Complete fields on the Tolerances tab as described in these sections:

Set total dollar percentage tolerances
Set total dollar cap tolerances
Set line dollar percentage tolerances
Set line cost dollar cap tolerances.
Set EDI Confirm (855) Line Dollar Percentage tolerances.
Set EDI Confirm (855) Line Dollar Cap tolerances.

Click Submit. The System Values list is displayed.
Click Refresh to see the values that you entered.

If you wish to set tolerances for vendors as well, you need to check the appropriate field on the Vendor AP Information panel.
See To set tolerances for a vendor.

To set tolerances for a vendor:

Vendor tolerances are set for each vendor AP Location. Thus, in order for you to establish tolerances for individual vendors, each vendor must be an AP or MM / AP vendor.

From the main Materials Contents, select Vendors > Vendors.
On the Quick Click menu, under "I would like to..." select AP Locations. (You can also select AP Locations from the Menu next to a vendor on the Vendors list.)
Enter the Vendor Name in the box and click Go.

Click the edit icon (or select ) Menu > Edit next to the AP Location of interest.. The Vendor Tolerances panel appears.
Complete the tolerance fields. The fields are identical to those on the System Values tab (see Figure 2), except that the vendor fields include the Use System Tolerances box. Click any of the following for details:

Set total dollar percentage tolerances
Set total dollar cap tolerances
Set line dollar percentage tolerances
Set line cost dollar cap tolerances.

If you wish to use vendor tolerances instead of system tolerances, do the following:

Remove the check from the Use System Tolerances field. (Select the box: Use System Tolerances. The mark in the box disappears.)

Click Submit.

To set tolerances to zero:

Follow the instructions for accessing either the System Values panel or the Vendor panel.
Enter 000000 in either the percentage and/or dollar cap fields:

Total Invoice Dollar Percentage Over
Total Invoice Dollar Percentage Under
Total Invoice Dollar Cap Over
Total Invoice Dollar Cap Under
Invoice Line Dollar Percent Over
Invoice Line Dollar Percent Under
Invoice Line Dollar Cap Over
Invoice Line Dollar Cap Over

Click Submit when you finish entering the value in fields.

Note: When you instruct the system to set tolerances to zero, invoice and receipt costs must match exactly. Otherwise, exceptions will be generated. No total invoice PPV amount will be within tolerance.

To instruct the system not to check tolerances:

Follow the instructions for accessing either the System Values panel or the Vendor panel.
Enter 99.999 in either the total invoice dollar percent and/or invoice line dollar percent fields:

Click Submit when you finish entering the value in fields.

Note: When you instruct the system not to check tolerances, any amount of PPV will be within tolerance.

Working with the Tolerance Fields

To set total dollar percentage tolerances:

Enter a whole number, followed by a decimal; e.g., 4.00 (for 4%); 5.500 for (5.5%) in either or both of these fields:

Total Invoice Dollar Percentage Over - sets a tolerance equal to the percent difference between a purchase order total and a greater invoice total. (The PPV is a positive value.)

Total Invoice Dollar Percentage Under - sets a tolerance equal to the percent difference between a purchase order total and a smaller invoice total. (The PPV is a negative value.)

Entering values in both fields sets upper and lower limits.

To set total dollar cap tolerances:

Enter a dollar value in either or both of these fields:

Total Invoice Dollar Cap Over - sets a tolerance equal to the dollar difference between a purchase order total and a greater invoice total.
(PPV > 0)

Total Invoice Dollar Cap Under - sets a tolerance equal to the dollar difference between a purchase order total and a smaller invoice total.
(PPV < 0)

Entering values in both fields sets upper and lower percentage limits.

To set line cost percentage tolerances:

Enter a whole number, followed by a decimal; e.g., 4.00 (for 4%); 5.500 for (5.5%) in either or both of these fields:

Invoice Line Dollar Percent Over - sets a tolerance equal to the percent difference between a line item's purchase order unit cost and a greater invoice unit price.

Invoice Line Dollar Percent Under - sets a tolerance equal to the percent difference between a line item's purchase order unit cost and a smaller invoice unit price.

Entering values in both fields sets upper and lower limits.

To set line cost dollar cap tolerances:

Enter a dollar value in either or both of these fields:

Invoice Line Dollar Cap Over - sets a tolerance equal to the dollar difference between a line item's purchase order unit cost and a greater invoice unit price.

Invoice Line Dollar Cap Under - sets a tolerance equal to the dollar difference between a line item's purchase order unit cost and a smaller invoice unit cost.

Entering values in both fields sets upper and lower percentage limits.

To set EDI Confirm (855) Line Dollar Percentage Tolerances:

Enter a whole number, followed by a decimal; e.g., 4.00 (for 4%); 5.500 for (5.5%) in either or both of these fields:

EDI Confirm (855) Line Dollar Percent Over - sets a tolerance equal to the percent difference between a line item's purchase order unit cost and a greater invoice unit price.

EDI Confirm (855) Line Dollar Percent Under - sets a tolerance equal to the percent difference between a line item's purchase order unit cost and a smaller invoice unit price.

Entering values in both fields sets upper and lower limits.

To set EDI Confirm (855) Line Dollar Cap Tolerances:

Enter a dollar value in either or both of these fields:

EDI Confirm (855) Line Dollar Cap Over - sets a tolerance equal to the dollar difference between a line item's purchase order unit cost and a greater invoice unit price.

EDI Confirm (855) Line Dollar Cap Under - sets a tolerance equal to the dollar difference between a line item's purchase order unit cost and a smaller invoice unit cost.

Entering values in both fields sets upper and lower percentage limits.

How the System Processes Tolerances

Here are the rules the system uses to check tolerances and generate exceptions:

The system checks to determine if tolerances are set for an invoice's vendor. If not, the tolerances that have been set in System Values are used.
If a difference exists between the invoice unit cost and the receipt unit cost for an invoice line, it is compared to the line cost tolerance set in the system.
If all the invoice lines are within tolerance, but the total PPV is outside of tolerance, the entire invoice is considered out-of-tolerance. An exception is generated.
If the PPV is within tolerance, but an invoice line exceeds a line tolerance, the entire invoice is in exception.
The percentage and dollar cap tolerances can work together, or independently. If both a percentage and a dollar cap tolerance are specified, the percentage is used until the dollar cap is reached. A PPV amount that is within tolerance can never be greater than a specified dollar cap.