Authorizing, Recoding and Approving Supplier Invoices for Payment

Outcome

Supplier invoices are recoded, authorized, and approved for payment. A confirmation list of approved invoices and an accounting journal are printed.

Any disputed invoices that should not be paid are cancelled. The cancelled invoices are listed as approved, but with the invoice amount and outstanding amount as zero (0) in 'Accounts Payable. Display' (APS200). A supplier invoice journal and an accounting journal are printed.

Invoices are ready to be paid:

• Based on an automated payment proposal in 'Supplier Payment Proposal. Open' (APS130).
• Manually and then reported in 'Supplier Payment. Enter Manual' (APS120).

Invoices have status Approved on 'Accounts Payable. Display' (APS200/B).

The FPLLOG table is updated with log entries for authorization-related activities. The FPAPRW table is updated with data on invoices sent for review.

Accounts payable and the general ledger are updated. In the basic flow (see Outline 1 below), these account entries are created:

For information on account entries created when matching invoices to purchase orders or goods receipt transactions, see Matching Supplier Invoices to Purchase Orders.

Before you start

• Define answers to these questions:
  • Which types of invoices will require authorization?
  • How will invoices be authorized (centrally or locally; by finance, purchasing or other; by matching the invoice to a purchase order/goods receipt; manual authorization by signing the invoice)? The 'Distribution notes' check box in 'Settings – General Ledger' (CRS750/E) must be selected per division if distribution notes should be printed during invoice entry and used as the basis for authorization and recoding. The authorization can also be managed using the M3 Automatic Document Capture (ADC) solution. M3 ADC captures information from paper documents, electronic documents in e mail, or documents generated from a fax server. The invoice image can then be distributed electronically for authorization.
  • When will invoices be authorized—before or after invoice entry?
  • Which of these methods will be used: approval only; recoding from clearing account followed by approval; rematching to purchase order/goods receipt followed by approval; cancellation of unapproved invoices?
• Define which invoices should receive status Non-approved and whether fully matched invoices are considered approved for payment automatically in the 'Not approved for payment' field on 'FAM Function. Open Details' (CRS406/F). You define this for FAM functions AP10 and AP50.
• Define the basic settings for authorization and recoding in 'Settings – Accounts Payable' (APS905). See Define Basic Accounts Payable Settings.
• Register the users who are entitled to authorize invoices centrally and per division in 'Authorized User – Supplier Invoice. Open' (CRS650). This program controls several important aspects of the payment approval routine—among them whether a specific user should use the standard workflow or the simplified workflow—and must be configured carefully. See Simplify Routines for Authorization of Supplier Invoices.
• Define additional user-specific settings for approval and recoding on 'Supplier Invoice. Recode' (APS110/P). The panel is displayed by pressing F13 on the (APS110/B) panel. See Manage Payment Approval Routine for a description of the alternatives.
• Authorized users may be defined for specific suppliers on 'Supplier. Define Purchase & Financial' (CRS624/E). The authorized user is then proposed automatically at invoice entry. Whether this user is responsible for recoding is controlled by (APS905).
• Users responsible for recoding may be defined for specific accounting identities in the 'Responsible' field on 'Accounting Identity. Open' (CRS630/F). Whether this user is then selected for recoding is controlled by (APS905).
• Retrieve the standard set of application messages to be used for different approval-related activities by clicking F14 in 'Settings – Application Messages' (CRS424). These messages are used and displayed per user in 'Application Messages. Open' (CRS420):
  • 056 Supplier invoice needs cross authorization
  • 057 Reminder: Supplier invoice needs cross authorization
  • 148 Reminder: Invoice to be authorized
  • 149 Invoice needs to be recoded
  • 150 Invoice matching not approved—price variance
  • 152 Invoice matching not approved–quantity variance
  • 155 Invoice matching not approved—price and quantity variance
  • 156 Invoice has been blocked in 'Supplier Invoice Batch. Open' (APS450)
  • 157 Invoice needs to be authorized
  • 158 Authorization code has been changed
  • 159 Invoice has been approved but not recoded.
• Define which sorting order to apply by default in (APS110) when opening an application message in (CRS420). Do this by adding the (APS110) program in the 'To program' column in 'Program Start Values. Open' (CRS014). Then, specify the number of the application message in the 'From program' column, such as *MSG149 (Invoice needs to be recoded). You can select any of the messages listed above with the exception of number 148. Specify the sorting order in the 'Sorting order' column. Example: If you specified sorting order 05, all invoices are displayed automatically per authorized user in (APS110). You can also configure the sorting order connection per user. See .
• Specify the supplier invoices as non-approved in 'Supplier Invoice. Record' (APS100) or 'Supplier Invoice Batch. Open' (APS450).
• A new voucher number series for each year for AP invoices must be used so that the number series do not overlap.

Comments

In M3 BE, the term authorized user (or authorizer) refers to someone with authorization to approve supplier invoices for payment. The authority itself consists of:

• Spending power in accordance with company policy
• Cost ownership at the accounting string level in the general ledger.

When cross authorize supplier invoices are enabled in (APS905), you can enable two users to approve the invoice before the invoice is set as approved for payment. Otherwise, the authorization and payment approval can be done in one step; that is, the authorized user authorizes a supplier's invoice to an accounting string and approves it for payment.

The invoice can also be approved separately by another authorized user after the invoice is authorized by the first authorized user. Reasons for such handling can be that the invoice amount exceeds the limits defined for the original authorized user, or that company policy prescribes a separate approval step to obtain better control.

The recoding can also be managed separately or as a part of the authorization/approval routine. Some companies let the person responsible for authorization do the recoding; others let another person do all the recoding before invoices are sent for authorization.

For each step in the workflow below, each person who is responsible can be notified automatically in the form of an application message. See Before you start.

Approval flow without invoice matching

1. Authorize supplier invoice

   Depending on your company policy, supplier invoices are sent for authorization before or after invoice entry. The authorization can be done either manually by signing the invoice and specifying the account to debit, or by authorizing the invoice in 'Supplier Invoice. Recode' (APS110). In the latter case, the invoice can be approved for payment automatically, depending on the maximum allowed invoice amount for the authorized user.

   If the approval routine is configured to use cross authorization and a supplier invoice is approved for payment by the first user with an appropriate approval limit, the invoice is sent for cross authorization. The account entries in the general ledger are updated with the user who performed the approval and are then automatically routed to the authorized user’s next level. If no next level is specified, the invoice will be routed to the default cross authorizer. When the cross authorizer approves the invoice, the invoice is set to approved for payment. Note that if the same user tries to perform both the first approval and the cross authorization, an error message will be issued and the user will be prevented from performing the approval.

   You can configure the routine so that invoice accounting lines for specific accounting identities in the same invoice are distributed to different authorized users. Each user approves his or her own accounting lines. When all parts of the invoice are authorized, the entire invoice is authorized.

   If the approval routine is configured to use the delegation of authority framework, all accounting lines connected to an authorized user are validated against the approval limits stored in the delegation of authority group for the authorized user. When all accounting lines are approved, the supplier invoice is approved for payment, unless the cross authorization limit is exceeded. When cross authorization has been performed, the supplier invoice is approved for payment.

   Lists of non-authorized invoices to serve as reminders are printed in 'Supplier Invoice. Display Non-Authorized' (APS230).

   Note: Invoices matched to a purchase order (PO) or goods receipt transactions are automatically considered authorized. The approval can be done manually afterwards or automatically when ending the invoice matching. Since these invoices receive their accountings from the PO/goods receipt transactions, they are not recoded manually.

2. Post supplier invoice to expense account (Recoding)

   If the invoice was booked on a clearing account as non-approved, the person responsible for recoding posts the authorized invoice to an expense account. This is done in 'Supplier Invoice. Recode' (APS110).

3. Approve supplier invoice for payment

   The final approval for payment can be done directly during authorization or recoding, or as a separate activity in (APS110). As long as you do not exit the program, you can change the status of an approved invoice back to non-approved, if needed.

4. Cancel supplier invoice

   In (APS110), you can also cancel disputed supplier invoices specified as non-approved.

   In exceptional cases, you can cancel invoices that are already approved for payment. Do this by specifying a credit note in 'Supplier Invoice. Record' (APS100) and then matching the credit note record to the original invoice record on 'Supplier Payment. Enter Manual' (APS120/F).

5. Monitor payment approval status

   You can supervise the authorization and approval routine through several programs.

   • You can trigger a reminder routine in 'Settings – Accounts Payable' (APS905). A reminder message is sent out automatically through 'Application Message. Open' (CRS420) to each affected authorized user on a specified date before the due date or the cash discount date of the invoice. The user can then jump directly from the message to the invoice for authorization.
   • You can also print a list of all those invoices together with stopped invoices through the batch job program (APS998), which is scheduled by M3 Job Scheduler.
   • All activities related to authorization and approval are logged automatically, depending on your settings in (APS905). You can review the log entries per supplier and invoice number in 'Supplier Invoice. Display Log' (APS235).
   • In case the invoice has been split into several parts for separate authorization, you can review the authorization status for each part in 'Supplier Invoice. Recode' (APS115).
   • Additional monitoring activities include sending invoices for review to a user together with a comment or adding an explanatory text to an invoice in (APS110).
   • All invoices that have been stopped for payment are displayed online in 'Supplier Invoice. Display Payment Stopped' (APS240).

Invoice matching and approval

1. Investigate reasons for incomplete invoice matching

   If the supplier invoice was matched to a PO or goods receipt transactions and the matching failed, it is automatically listed as non-approved in (APS110). Check the reasons for the incomplete matching and decide which action to take.

   If the invoice matching ended abnormally in 'Supplier Invoice. Match GR Line' (APS360), you can use 'Program Problem. Solve' (CRS418) to release allocated goods receipt transactions before proceeding. You can also use this program to release the invoice itself if the matching through (APS110) ended abnormally.

2. Match invoice to Purchase Order (PO) or goods receipt

   If the supplier invoice was specified as non-approved without being matched (such as if the invoice was being disputed or the matching transactions cannot be identified), you can match the invoice directly from (APS110). Refer to the See also section of this document for document links.

3. Adjust invoice lines

   Incorrect values in the invoice lines in (APS360) can result in failed invoice matching. After identifying the problem, start (APS360) again through (APS110) and adjust the invoice lines.

4. Create debit note

   If there was a discrepancy between the received and invoiced quantities and prices, you can create a supplier debit note manually when performing the invoice matching from (APS110).