What are Matching Tolerances?

With matching tolerances, you determine what is an acceptable discrepancy between invoice and receipt/purchase order amounts. You set up tolerances for each rule, for matching, PO cost messaging/purchase order, reconciliation messaging, and service. (You can define tolerances for all match rules to automate the matching process.) Messaging tolerances determine when reconciliation messaging, quantity type service messaging, and amount type service messaging is to occur.

Tolerances allow transactions to match when they do not have exact matching amounts and quantities. Without the matching tolerances, operator intervention would be required on every transaction that does not have an exact match. To ignore the difference, you set up a tolerance amount and/or a percentage of the invoice amount on each match rule. Tolerances are defined for amounts and/or percentages under and/or over the comparison between the receipt/purchase order amount and invoice amount. If your invoice and receipt/purchase order vary by this amount or less, the invoice will match. If you enter an amount and percent of zero and the invoice and receipt/purchase order varies, the invoice cannot match without intervention.

When setting up matching tolerances, you decide between two options, which tell the application how to handle the difference between the receipt/purchase order and invoice amounts (discrepancy) as it relates to the amount and percentage tolerance:

• AND option - If the invoice discrepancy falls outside of both the amount and percentage tolerance, the match does not occur.

  For example, you set the amount tolerance to $5.00 and the percentage tolerance to 10%. The receipt is for $100, and the invoice is for $111. The invoice discrepancy is then $11.00. The match does not occur because the invoice discrepancy of $11.00 exceeds both the amount tolerance ($5.00) and the percentage tolerance (10% or $10.00).

• OR option - If the invoice discrepancy falls outside of either the amount tolerance or the percentage tolerance, the match does not occur.

  For example, you set the amount tolerance to $5.00 and the percentage tolerance to 10%. The receipt is for $100, and the invoice is for $106. The invoice discrepancy is then $6.00. The match does not occur because the invoice discrepancy falls outside of one of the tolerances, the amount tolerance of $5.00.

Possible reasons for an invoice and receipt to not match perfectly are receiving problems, pricing errors, data entry errors, and so on. The application allows you to handle the in tolerance difference in one of two ways; pay the invoice in full, or chargeback the vendor for the difference between the invoice and the receipt. The chargeback is automatically generated by the application.

In a Detail Match, tolerances are used at the extended line item or unit line item. Within an Invoice Match, tolerances are applied at the invoice header. Generally speaking, the Invoice Match tolerances are tighter than the Detail Match tolerances. In addition to the tolerances for Amount differences, there are unit tolerance differences for most processes.