Matching Supplier Invoices to Purchase Orders

Outcome

• A supplier invoice is matched to:
  • The goods receipt lines connected to the corresponding PO
  • The PO line, if there were no goods receipt transactions when matching took place
  • Both goods receipt lines and PO lines, if only some goods have been received.
• If the matching was incomplete or not completely approved (such as when a supervising employee has to review it), the invoice is posted, normally to a clearing account. A debit note or debit note request may also be created.
• A supplier invoice journal and an accounting journal are printed. A distribution note may be printed as well, depending on your settings.
• Pay the invoice if the matching is complete and approved. You do this either by creating payment records manually in 'Suppl Payment. Enter Manual' (APS120) or automatically in 'Suppl Payment Proposal. Open' (APS130).
• If the matching is complete and approved and a debit note is created, you update accounts payable with the debit note, if necessary, by using option 9='Update AP' for the debit note in 'Supplier Invoice Batch. Open' (APS450). Pay the invoice according to the paragraph above. If the payment record is created automatically, then the amount is set as the amount on the invoice minus the amount on the debit note.
• If the matching is complete and approved and a debit note request is created, you print the request using option 6='Print' in (APS450). You can choose to pay the invoice according to the paragraph above and enter the credit invoice in (APS100) once it arrives from the supplier, or await the credit invoice from the supplier and then create a payment record manually and match the supplier invoice to the credit invoice.
• If the matching was done before some or all of the goods arrived, you match the goods receipt to the invoice once more the goods arrive to make sure that you get the goods you are paying for. This is done regardless of whether the invoice is approved for payment or not. Refer to Concluding Invoice Matching when Goods Arrive.
• If the matching was partial, or not approved, you must recode and authorize the invoice in 'Supplier Invoice. Recode' (APS110).
• Examine any remaining differences between received and invoiced goods in:
  • 'Purchase Order. Print Received/Not Invoiced' (APS580). Reconcile the goods receipts for PO lines that are invoiced in 'Purchase Order. Reconcile Received/Not Invoiced' (APS370). (After this, the PO receives status 85 and is included in the purchase statistics.) If a fully matched PO receipt does not have status 9 and invoice matching date (the internal accounting entries for the PO receipt must also be transferred to the general ledger for the invoice matching date to be set), it is possible to manually recalculate invoice matching status and date. This is done by using related option '15' in (APS370). This function checks if the invoice matching date, status, and PO status should be recalculated.
  • 'Supplier Invoice. Print Invoiced/Not Received' (APS585).
• Where invoice matching is performed for purchase orders that originate from a purchase on a work order material line in 'Work Order. Open Line' (MOS101/B):
  • The price in 'Supplier Invoice. Match GR Line' (APS360) is transferred to the WO material line cost. The estimated cost remains on the material line until the material line is invoice matched and then the cost might be updated if the invoice price is different to the estimated cost.
  • Costs are also updated when the purchase order is marked as invoice completed in 'Purchase Order. Reconcile Recd/Not Invd' (APS370).
  • If the work order is connected to a Maintenance Customer Order, the MCO invoice line specification records are also updated. In scenarios where the MCO order line has already been invoiced to the customer, a new order line is created with the variance amount.
  • The cost updated on the material line is sourced from database field MMOMAT.QMMPRC. This field holds a unit price, i.e. the charges are divided by quantity. Updated costs from the invoicing process will recalculate QMMPRC and divide with quantity QMCNQT.
  • The following limitations however apply to this scenario:
    • Update of cost and MCO invoice line from (APS360) is only supported when goods arrive before the invoice (invoice line type 1).
    • The item is non-stocked (inventory accounting = 0 in 'Item. Open' (MMS001) ).
    • The work order type is update material plan <> 1.
    • The purchase order type is of order category 20, 30 or 40.

As an outcome of this process, these changes are made in M3:

• The goods receipt lines have one of the following statuses, as displayed in (APS370): 0='Not matched or only partially matched' or 9='Fully matched'.
• The purchase order has status 80 or 85.
• The invoice status is set to approved or not approved for payment, as displayed in 'Supplier Invoice. Display Separate' (APS215).

Before you start

• Accounting rules based on accounting event PP20 must be defined in 'Accounting Rule. Set' (CRS395).
• If the matching is made to a purchase order with non-inventory items, '=10903' can be defined as an accounting object for accounting rules PP20 - 227 and PP20 - 228 in (CRS395/E) in order to handle posting of price variances. This means that, when manually defining an accounting string for a non-inventory purchase order in 'Planned Purchase Order. Open' (PPS170) or 'Purchase Order. Open' (PPS200), possible price variances discovered during invoice matching will be posted on the same string as the one manually defined.
• Users entitled to authorize invoices are registered centrally and per division in 'Authorized User – Supplier Invoice. Open' (CRS650). This program also controls:
  • The maximum amount for each invoice (in the currency of the division)
  • The authorized user that is automatically chosen if the invoice amount is higher than the maximum amount or if the original authorized user is reported as unavailable
  • The user responsible for recoding invoices for the authorized user.
• Basic authorization settings are defined in 'Settings – Accounts Payable' (APS905). This program controls, among other things, whether it is only possible to authorize an invoice if the person specified as the authorizer is the same person as the one logged onto the system.
• Authorized users may be defined for specific suppliers in 'Supplier. Define Purchase & Financial' (CRS624). The authorized user is then proposed automatically at invoice entry.
• You have defined which fully matched invoices should automatically be approved for payment (if entered by an authorized user and below his/her highest approval amount), using the:
  • 'Invoice approval condition 1' field in 'Supplier. Define Purchase & Financial' (CRS624)
  • 'Not approved for payment' field in 'FAM Function. Open Detailed' (CRS406) for the detailed record used for the FAM function.
• If variances up to a certain level should be allowed automatically, these must be defined in 'Settings – Supplier Invoice Match' (APS900). If you use workflow (Next Manual Step) 8, you must also specify how variances within allowed limits should be posted in the 'Limits for distributing variances to invoice lines' field in (APS900). Refer to Define Allowed Variances for Invoice Matching.
• Different general settings that control how the matching will be processed automatically must be defined in 'Settings – Accounts Payable' (APS905/F). This includes deciding how the matching will be processed when using workflows (Next Manual Step) 5–8, if the delivery is not complete or if no goods have been received for the purchase order. Refer to Define Basic Accounts Payable Settings.
• Different settings that control how the invoice matching will be processed automatically per supplier must be defined in 'Supplier. Define Purchase & Financial' (CRS624). Refer to Register supplier or payee information required for financial management
• The PO must have the same currency as the invoice. Otherwise the currency must be changed during invoice entry by pressing F15, the first time the invoice is matched to the purchase order, in 'Supplier Invoice. Record' (APS100/F).
• One of alternatives 2–8 must be selected in the 'Next manual step – invoice matching' field for a detail record under FAM function AP10 in 'FAM Function. Open Details' (CRS406). If a distribution note always should be printed to use as a basis for approval or recoding after invoice entry in 'Supplier Invoice. Record' (APS100), the 'Distribution note' check box must be selected in 'Settings – General Ledger' (CRS750/E).
• In 'Settings – Application Messages', you have defined whether authorized users should receive a message in 'Application Message. Open' (CRS420) when incidents occur during the matching process, such as when an invoice needs to be authorized. The messages to be used are 149 to 150, 152, 155, 157, 160 to 164 and 200 to 202.

Introduction

The workflow for invoice matching depends on the situation, the information included on the invoice and your company routines. To make it easier to understand the different steps without losing the overview, we present the workflow in two separate sections: Workflow - Overview and Workflow - Detailed

On the detail level, you can choose from among nine different flows ("Next Manual Steps" or NMS). The difference between them is that the higher the number of the flow, the more automated it is. For example, if you select flow 5, all steps included in flows 2, 3 and 4 before the start step of flow 5 are automatically carried out. The rest you do manually.

A rule of thumb is that flows 3 and 4 are used if the invoice refers to more than one PO, whereas flows 5 to 8 are used if there is only one PO referred to in the invoice.

You enter the number for the workflow to use during:

• Invoice entry in 'Supplier Invoice. Record' (APS100/E)
• Invoice recoding in 'Supplier Invoice. Recode' (APS110/E) or 'Supplier Invoice. Recode' (APS112/B).

For electronically received invoices, the matching is completely automatic.

Follow these steps - Overview

1. Enter New Invoice

   Enter a supplier invoice by selecting a FAM function detail record in 'Supplier Invoice. Record' (APS100). This record controls the workflow to use for invoice matching. However, the flow can be manually overruled during invoice entry. Depending on the workflow, the steps that follow are more or less automated.

2. Select Previously Entered Invoice to Recode

   For invoices that are incompletely matched in (APS100) or 'Supplier Invoice Batch. Open' (APS450), you need to recode and approve the unapproved invoice lines. You make the necessary adjustments starting in 'Supplier Invoice. Recode' (APS110). There you can also match invoices that were not matched previously, regardless of whether they are approved or not approved for payment.

3. Select Goods Receipt Transactions

   If the goods are reported as received in 'Purchase Order. Receive Goods' (PPS300), you select the goods receipt lines to which the invoice should be matched.

   You can do this either directly by manually selecting certain lines in 'Supplier Invoice. Select Transactions to Match' (APS351), or indirectly by selecting a purchase order, delivery note number or supplier order number in 'Supplier Invoice. Select to Match' (APS350).

4. Select PO Lines

   If the goods have not been received before the invoice, or if the goods receipt has been deleted in 'Purchase Order. Display Line Transactions' (PPS330), then there are no goods receipt lines to use for the matching.

   In this case you select the PO lines instead in (APS351).

5. Review Invoice Lines and Create Account Entries for Approved Lines

   Review the invoice lines that were created based on your selection and adjust them, when necessary, so they correspond to the (physical) invoice received from the supplier. You have several options, among them:

   • Change the quantity and amount per line proposed from the goods receipt
   • Add a charge for all invoice lines or for a specific line
   • Manually post variances within allowed limits by using an accounting option

   If variances in price or quantity in excess of the allowed limits were created, you can create a debit note or a debit note request. The note/request's amount will automatically be calculated as the variance in price/quantity between the invoice lines and the goods receipt/purchase order lines.

   When all lines are approved, you create account entries for the lines. You do this in 'Supplier Invoice. Match GR Line' (APS360).

6. Create Voucher

   Check that the amount to distribute is down to 0 in (APS360). If necessary, open any lines that need adjusting and make the necessary changes. This could mean writing off any remaining variances within limits with an accounting option, for example.

   When you have checked that everything is OK, create a preliminary voucher for all account entries connected to the invoice matching. You do this by exiting (APS360). After that, you can enter more invoices in (APS100). The general ledger is then updated when the invoice processing is finished.

Follow these steps - Detailed

1. Enter Supplier Invoice or Select Invoice on Clearing Account

   See activities 1 and 2 in the Workflow Overview section.

2. Decide How to Proceed in (APS360)

   After you have entered an invoice number in (APS100) or selected option 11 for an invoice in (APS110), 'Supplier Invoice. Match GR Line' (APS360) is started. There you decide how to proceed with the matching

   You start in (APS110) in order to review, adjust and approve already recorded invoice lines. During invoice entry in (APS100), as well as in (APS110), you can choose whether to match the invoice against a general number, such as PO number, delivery note number or supplier order number in (APS350), or against the goods receipt lines in (APS351).

   When to use as starting step:

   • You must adjust invoice lines in an invoice manually posted to a clearing account in (APS100).
   • You must adjust and approve invoice lines for an automatic invoice that were not approved during the automated match in 'Supplier Invoice Batch. Open' (APS450).

   This step would not normally be relevant when entering definite invoices in (APS100), since there are no existing invoice lines to review. A smoother flow would be to start with step 3 or 4.

3. Select PO, Delivery Note or Supplier Order Number

   In 'Supplier Invoice. Select to Match' (APS350), select the number stated on the invoice to automatically select all connected goods receipt lines.

   When to use as starting step:

   • You already know the delivery note number, PO number of supplier order number.
   • The invoice refers to more than one PO.

4. Select Goods Receipt Lines or PO Lines

   Carry out this activity in 'Supplier Invoice. Select Transactions to Match' (APS351). See activities 3 and 4 in the Workflow - Overview section.

   When to use as starting step:

   • You do not know the exact details or only know the item number, for example.
   • You have registered several goods receipts, but only received an invoice applicable to one of them.
   • You receive the invoice before the goods.
   • The invoice refers to more than one PO.

5. Create Invoice Lines

   After selecting the goods receipt or purchase order lines, you create the corresponding invoice lines by simply pressing a function key in (APS350) or (APS351).

6. Review or Adjust Invoice Lines

   Carry out this activity in (APS360).

   When to use as starting step:

   • The invoice refers to only one PO.

7. Check Invoice Lines

   Check the PO order price for each line against the invoiced price in (APS360) and the PO quantity or goods receipt quantity for each line against the invoiced quantity in (APS360). This is done automatically by pressing a function key. If there are any variances in price, there is an automatic check against the user-defined variance tolerances in 'Settings – Supplier Invoice Match' (APS900). You receive a message confirming the result of the check. If the invoice lines were not approved, you return to step 6 to adjust the lines and, for example, create a debit note.

   When to use as starting step:

   • The invoice refers to only one PO.
   • You suspect that you may need to adjust values manually

8. Create Account Entries

   After you have checked the invoice lines, create account entries that offset the goods receipt transactions for all approved lines. Post any unapproved lines to a clearing account, for example

   When to use as starting step:

   • The invoice refers to only one PO.
   • The matching does not seem to be problematic.

9. Create Voucher for the Invoice Matching

   Create a preliminary voucher in (APS360). See activity 6 in the Workflow – Overview section.

   When to use as starting step:

   • The invoice refers to only one PO.
   • The matching does not seem to be problematic.

10. Enter PO Number in 'Supplier Invoice. Record' (APS100) or 'Supplier Invoice. Recode' (APS110)

    For the most automated way to match an invoice, enter the purchase order number in (APS100/E) or in (APS110). If there are no problems involved, all previous steps will be carried out automatically and you will not leave the panel.

    It is also possible to start this automated matching in (APS350) or (APS351). If you do so, you can match the invoice not only to one, but to several purchase orders.

    If there are discrepancies exceeding any user-defined variance tolerances in (APS900), or if all of the goods on the purchase order have not been received, you stop at step 6; that is, in (APS360). This means that minor variances are automatically written off.

    When to use as starting step:

    • The matching does not seem to be problematic.
    • You want to automate your supplier invoice entry as much as possible.