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Setting up Price Tolerances for Invoices

The invoice price does not always match the expected price from the purchase order line. There are a number of reasons why prices might differ, for example, if the purchase order was not updated when the supplier provided the correct price.

When you create an invoice line, the system sets the invoice line price to the purchase order line’s current price. If the invoice price differs from the default price, you can change the price to match the price on the invoice.

Price tolerances allow you to control what is an acceptable price change and what is an unacceptable price change. An invoice with an acceptable price change can be entered and accepted by the invoicing clerk. No further approval is required.

An unacceptable price change occurs when the difference between the purchase order price and invoice price exceeds your tolerances.

You can define separate price tolerances to control situations where the invoice price is higher than the purchase order price, and where the invoice price is lower than the purchase order price. To be within your tolerances, the change as a percentage and value must both be within your site’s tolerances.

You can also define tolerances for tax and extra charge lines. The expected amount on extra charge lines is the sum of the expected amounts from all of the invoice line extra charges for the same extra charge. For each individual invoice line, the expected extra charge amount is calculated from the purchase order line’s extra charge (if one is referenced). If there is no purchase order line referenced then the expected value is zero.

If you do not enter price tolerances for an invoice line type, the system allows any difference for that line type and does not require approval of that type of invoice line.

Note: The tolerances used are those entered for the site that owns the invoice. These may be different than the tolerances for the site at which the transaction was originally entered. Site tolerances can also be overridden at the resource level.

The price tolerances are defined as:

•	Percentage: the percent by which the invoice line price can differ from the purchase order line price.

•	Amount: the amount by which the invoice line can differ from the expected line price based on the purchase order price and quantity being invoiced.

For example, a purchase order line has an order quantity of 10 at a price of $2. An invoice line is entered for a quantity of five at a price of $2.25. In this case the price differences are:

•	Percent difference = 12.5% ($0.25 / $2.00 *100)

•	Amount difference = $1.25 ((5 * $2.25) - (5 * $2.00))

If either the percentage or amount exceeds your tolerances, the line and invoice cannot be posted until one of the following occurs:

•	The invoice line is sent for approval and is approved (if invoice line approval is used)

•	The line is made acceptable (if invoice line approval is not used). There are three ways this can occur:

•	The invoice line price can be changed. If the price was entered incorrectly or the price on the invoice is incorrect, the price on the invoice is updated.

•	The purchase order line price is updated. If the buyer agrees with the price, the price on the purchase order is changed. The invoice line is updated as “okay”.

•	The price tolerances can be changed if they are too restrictive.

Note: In order to enter price tolerances for extra charge and tax lines, you must first enable approvals for these lines in the site’s Approval Settings dialog. See Setting up Invoicing and Credit Memo Approvals.

To Set the Price Tolerances for a Site

1.	From the Site window, select the Administration menu and then Invoice Management Settings. The Invoice Management Settings dialog appears.

Tip: You can also access invoice management settings from the Site window by selecting the Invoicing view, Settings tab, and then the Invoice Settings node in the tree.

2.	Select the Rules tab.

3.	You can set price tolerances for regular invoice lines, extra charge lines, and tax lines. For each line type, you can specify tolerances for price increases and price decreases.

Select the lines and increases or decreases for which you want to set tolerances. For each increase or decrease, enter:

•	Allowable percentage: the percent by which the invoice line price can differ from the purchase order line price.

•	Allowable amount: the amount by which the invoice line can differ from the expected line price based on the purchase order price and quantity being invoiced.

Note: To give no tolerance for a price increase or decrease, you would enter zero for both the amount and percentage.

4.	To set the automatic balancing threshold, see Setting the Automatic Balancing Threshold for Invoices.