Matching tolerances

When matching vendor invoices to purchase orders in preparation for payment, you can save time determining whether the invoice or the purchase order figures are correct. Preset tolerance values enable you to skip this step by determining which vendor invoices are acceptable matches to your purchase order during PO reconciliation based on percent and quantity or amount tolerance levels, whichever is less. Tolerance levels and the minimum invoice variance amount are set at the system, company-wide level in SA Administrator Options-Vendors-Receiving.

You can also define tolerances at the vendor level in Vendor Setup on the Reconcile view.

The Use Vendor Reconciliation Tolerances option in Vendor Setup determines whether system tolerances or vendor tolerances are used during purchase order matching. If you select this option, all purchase orders from the vendor are matched according to the tolerances levels defined on the Reconcile view. If you leave this option blank, the system tolerances set up for the company in SA Administrator Options-Vendors-Receiving are used.

There are three tolerances you can set up: unit quantity, line amount, and invoice amount . You also have the option to set up two additional user-defined tolerances at the system level. If the quantity, line, or invoice amounts are out of tolerance, errors are displayed in Vendor Invoice Center Entry, Vendor Entry Group EDI Invoice Processing Report, and Vendor Entry Group Update/Reconcile Invoices Report. After you resolve those invoices, you can perform reconciliation again. Tolerances can be defined as a percent difference up to a specific amount. You can also leave the tolerance fields blank, in which case invoices must match received purchase orders exactly to be considered a match. Capitalized addons are not counted in any of the tolerance level checks.

Unit quantity tolerance

Invoice line quantities are compared to purchase order received quantities, plus or minus the quantity tolerance percentages and amounts. For example, if you specify 2 in the Percent field and quantity of 2 in the Up To Amount field, during the reconciliation process the system accepts an invoice’s line quantity as a match to the purchase order’s line quantity if that value is within 2% or 2 items, whichever is less.

Line amount tolerance

Invoice lines are compared to received purchase order lines as defined by quantity multiplied by price, plus or minus the line tolerance percentages and amounts. This is also referred to as the extended amount listed on the invoice and purchase order.

Invoice amount tolerance

Invoice tolerance levels determine the match between an invoice as a whole and a purchase order as a whole, plus or minus the tolerance percentage and amount.

Invoice tolerances are applied on two levels. The first level compares the total of purchase order lines costed at the invoice quantity and invoice cost to the total purchase order lines costed at the receipt quantity and receipt cost. The second level compares the total amount versus unmatched trade plus expense General Ledger distributions.

Overriding tolerances

During purchase order matching, you can optionally set matching tolerances by indicating whether the individual criteria should be applied or restricted from being used. There are three places you can indicate that you want to override the tolerances:

In Vendor Invoice Center Entry, you can select the Override Recon Tolerances option to override all tolerances on the entire transaction.
On the Vendor Invoice Center Entry-PO Line Entry view, you can select the Over Tolerance option to override the quantity and line tolerances for this invoice. You can still have tolerance issues if the amount of this line is also over the Invoice tolerance.
In the Vendor Invoice Center Entry-Final Update window, you can individually select each of the tolerances. Your selections apply to all transactions you have selected for final update.

At the invoice or purchase order line level you can also override any tolerance levels set and accept what you have entered. Finally, you can override tolerance levels for the entire group of invoices during the update and reconciliation process if the Allow User to Override Update Tolerances option in SA Operator Setup-Controls is set to Yes.

If you override any of the tolerances, the variance amounts go to the GL variance account specified in Vendor Invoice Center Entry-Final Update if you use the Receive Cost method; the variance amounts go to the IC Costs account if you use the Match to Cost method.

Ignoring tolerances

Some processes perform automatic receipt of Direct Order purchase orders (DO POs). You can set options in SA Administrator Options-Vendors-Receiving to ignore header and line tolerances during these processes. Use these options to ignore tolerances:

Ignore Line tolerance When Set to 0: When this option is selected, and the Line Amount, Line Amount Percent, Unit Quantity, and Unit Quantity Percent are 0, no tolerance checks are performed during Vendor Invoice Center Entry, Vendor Entry Group EDI Invoice Processing Report, or Vendor Entry Group Update/Reconcile Invoices Report. Select this option to partially receive, or not receive at all, a Direct Order PO line without receiving a tolerance error.
Ignore Header Tolerances: When this option is selected, no tolerance checks are performed against the PO header totals. Select this option to partially receive a DO PO without receiving a tolerance error. Any amount not received on the DO PO are moved to a back order if back orders are allowed on the purchase order.