Invoice Tolerance Keys - An insight - Part 2

Finally here is the part 2 of Invoice Tolerance keys which is the continuation of part 1  .

KW: Variance from condition value

Definition:

The system calculates the amount by which each delivery costs item varies from the product of quantity invoiced * planned delivery costs/ planned quantity. It compares the variance with the upper and lower limits defined (absolute limits and percentage limits).

System Behavior:

PO Qty = 100 EA

FRB1 = 100 SGD

GRN Qty = 100 EA

IR Qty = 100 EA

Planned delivery cost = 110 SGD

Variance (KW) = 100 * (110/100) = 110 which is 10 SGD more than PO but within the tolerance hence No warning message.

If planned delivery cost is 111 SGD

Variance (KW) = 100 * (111/100) = 111 which is 11 SGD more than PO value above the tolerance hence below warning message will be issued and invoice will be blocked for payment.

LA: Amount of blanket purchase order

Definition:

The system calculates the sum of the value invoiced so far for the order item and the value of the current invoice and compares it with the value limit of the purchase order. It then compares the difference with the upper percentage and absolute tolerances defined.

System Behavior:

PO Limit = 1000 SGD

GR not applicable

IR1 Value = 500 SGD

IR2 Value = 510 SGD system allows without any warning message as the variance = (500 +510)=1010 is compared with PO limit 1000 SGD which is within the tolerance.

If we try to post the invoice for 511 then system would throw below pop-up message. Still we can post the invoice which will be blocked for payment.

LD: Blanket purchase order time limit exceeded

Definition:

The system determines the number of days by which the invoice is outside the planned time interval. If the posting date of the invoice is before the validity period, the system calculates the number of days between the posting date and the start of the validity period. If the posting date of the invoice is after the validity period, the system calculates the number of days between the posting date and the end of the validity period. The system compares the number of days with the absolute upper limit defined.

System behavior:

Scenario 1:

PO Validity end date: 03/12/2015

Posting date : 13/12/2015

No warning message because (13-03)= 10 days is within tolerance

Scenario 2:

PO Validity end date: 03/12/2015

Posting date : 14/12/2015

Warning message as below since variance is above tolerance (14-3) = 11 days. It will be blocked for payment .

PP: Price Variance

Definition:

The system determines by how much each invoice item varies from the product of quantity invoiced * order price. It then compares the variance with the upper and lower limits defined (absolute limits and percentage limits).

When posting a subsequent debit/credit, the system first checks if a price check has been defined for subsequent debits/credits. If so, the system calculates the difference between (value of subsequent debit/credit + value invoiced so far) / quantity invoiced so far * quantity to be debited/credited and the product of the quantity to be debited/credited * order price and compares this with the upper and lower tolerance limits (absolute limits and percentage limits).

System behavior:

Scenario 1:

PO Price :100 SGD / Item

PO Qty  -:100 EA

PO Total value : 10000 SGD

IR Total amount: 10010 SGD

IR Qty  - 100 EA

System would allow without any message. Since the variance is (10010 – 10000) = 10 SGD which is within the tolerance.

Scenario 2:

PO Price :100 SGD / Item

PO Qty  -:100 EA

PO Total value : 10000 SGD

IR Total amount: 10011 SGD

IR Qty  - 100 EA

System would pop-up below message. Since the variance is (10010 – 10000) = 11 SGD which is above the tolerance and it will be blocked for payment.

Scenario 3:

Invoice & Subsequent debit:

For the same PO Qty & amount if we do invoice as

IR Qty = 100 EA

IR Value = 10000 SGD

Then

Subsequent debit as

Qty = 100 EA

Value = 10 SGD

No warning message since the variance (already invoiced value+ current subquent debit value – PO amount ) = ( 10000+ 10 – 10000) = 10 is within tolerance.

If the value is 11 SGD then system would pop-up below message

PS: Price variance: estimated price

Definition:

If the price in an order item is marked as an estimated price, for this item, the system calculates the difference between the invoice value and the product of quantity invoiced * order price and compares the variance with the upper and lower tolerance limits defined (absolute limits and percentage limits).

When posting a subsequent debit/credit, the system first checks whether a price check has been defined for subsequent debits/credits, If so, the system calculates the difference between (value of subsequent debit/credit + value invoiced so far) / quantity invoiced so far * quantity to be debited/credited and the product quantity to be debited/credited * order price. It then compares the variance with the upper and lower tolerance limits defined (absolute limits and percentage limits).

                           This works same as ‘PP’ tolerance key when the PO price is flagged as Estimate price.

ST: Date variance (value x days)

Definition:

The system calculates for each item the product of amount * (scheduled delivery date - date invoice entered) and compares this product with the absolute upper limit defined. This allows relatively high schedule variances for invoice items for small amounts, but only small schedule variances for invoice items for large amounts

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System behavior:

Scenario 1:

PO item value: 100 SGD Per item

PO Qty = 10 EA

PO Value = 1000 SGD

PO Delivery date: 03/12/2015

IR Value = 1000 SGD

IR Qty = 10 EA

Invoice entering date = 02/12/2015

Variance = PO item amount * ( PO delivery date –Invoice entry date)

               = 100 (3- 2) = 100 *1 = 100 SGD

This is within tolerance hence no warning message.

If we post the invoice on 01/12/2015 then variance would be

            = 100(3-1) = 100(2) = 200 SGD

This is above the tolerance limit hence invoice would get blocked for payment.

                          There won’t be any warning message for date discrepancies before posting the invoice

VP: Moving average price variance

Definition:

When a stock posting line is created as a result of an invoice item, the system calculates the new moving average price that results from the posting. It compares the percentage variance of the new moving average price to the old price using the percentage tolerance limits defined.

System behavior:

Material master MAP price: 100 SGD

PO Price = 100 SGD , Quantity = 10 EA and Value = 1000 SGD

Invoice value = 1060 SGD

New MAP after invoice posting = 1060/10= 106 SGD

Variance = (106 – 100 )/100 = 6%

Within PP tolerance limit but above the VP tolerance limit.

Below information message will pop-up and Invoice will not be blocked for payment. Based on this tolerance key we can make the below info message as Warning or error before posting.

With this I have completed all the tolerance keys relevant for Invoice Posting.

P.S: There is one more tolerance key PC which is used for invoice with reference to Contract which is not covered in this article due to technical reasons.