Configure invoice validation policies

  • 15 minutes

This unit explains how to configure invoice validation policies.

Policies and invoice matching are set up in the Accounts payable module.

Invoice validation

To set up invoice validation, follow these steps.

  1. Go to Accounts payable > Setup > Accounts payable parameters.
  2. Select the Invoice validation tab.
  3. Select or clear the Enable invoice matching validation check box.
    • Select whether approval is required before an invoice that contains discrepancies for invoice matching can be posted. If set to Allow with warning, visual indication will display when a discrepancy for invoice matching exceeds the tolerance. However, you will be able to post the invoice. To use workflows together with invoice matching validation, make sure that the Post invoice with discrepancies field is set to Allow with warning to avoid having to approve multiple times.
    • In the Automatically update invoice header match status field, select whether matching will be performed automatically during invoice data entry by the system. The recommended setting is Yes, unless you are experiencing data entry performance concerns. Disabling automatic updates may enable faster system performance because the invoice matching validation will be bypassed during data entry. The data entry clerk will need to manually update the invoice's match status to see the invoice matching validation results when this is set to No.
  4. Set Invoice totals matching.
  5. Select or clear the Match invoice totals check box to match actual invoice totals with expected totals.
    • Select whether an icon is displayed if a discrepancy for invoice matching exceeds the tolerance. You can select to display the icon when a positive discrepancy exceeds the tolerance, or when either a positive or a negative discrepancy exceeds the tolerance. For example, the tolerance is 5 percent, and the total invoice amount on the purchase order is 100.00. Therefore, a price match icon is displayed if the total invoice amount on the invoice exceeds 105.00. If you select If greater than or less than tolerance, the icon is also displayed if the invoice amount is less than 95.00.
  6. In the Invoice totals tolerance percentage field, enter the percentage variance that is acceptable. This value is the default value for the company. This value can be overridden for specific vendors, using the Invoice totals tolerances page.
  7. Set Price and quantity matching.
  8. In the Line matching policy field, select a value to be used as the default policy for the legal entity that you are working with. -Not required means there is no verification of individual invoice line prices to purchase order price or invoice quantities to packing slip quantities required.
    • Two-way match means that the verification of invoice lines is required but only the purchase order and the supplier's invoice documents are involved in the verification. The product receipt isn't factored into the matching validations.
    • Three-way match means that the invoice net unit price will be compared to the purchase order's net unit price and the matching product receipt quantity will be compared to the invoice quantity.
  9. To allow a different level of matching to be applied for an item, vendor, vendor and item combination, or purchase order line, select a value in the Allow matching policy override field. The legal entity line matching policy can be overridden for a specific vendor, item, or vendor and item combination in the Matching policy page.
    • If you use a line matching policy of two-way matching or three-way matching, you can set up price tolerance percentages for your legal entity, items, and vendors on the Item price tolerance page. The legal entity default price tolerance will be set to zero percent for two-way and three-way matching. When vendor invoices are compared with the information on purchase orders, the applicable price tolerance percentage is searched for.
  10. To match price totals for line items on invoices, select a value in the Match price totals field. This type of matching is useful when the vendor sends multiple invoices for the same purchase order line. You can compare price information for the net amount of each line on the invoice and all pending and previously posted invoice lines, with the net amount of the corresponding purchase order line. Options include None, Percentage, Amount, or Percentage and amount.
  11. In the Purchase price total tolerance percent field, enter a percentage of the variance you will accept. This field is available when Match price totals is set to Percentage or Percentage and amount.
  12. In the Purchase price total tolerance field, enter an amount in the accounting currency. This field is available when Match price totals is set to Amount, or Percentage and amount.
  13. In the Display price total match icon field, select when an icon is displayed if a discrepancy for invoice matching exceeds the tolerance. The icon can be displayed when a positive discrepancy exceeds the tolerance, or when either a positive or a negative discrepancy exceeds the tolerance. For example, the tolerance is 5 percent, and the line price total on the purchase order is 10.00. Therefore, a price match icon is displayed if the line price total on the invoice exceeds 10.50. If you select If greater than or less than tolerance, the icon is also displayed if the line price total on the invoice is less than 9.50.
  14. Set the charges matching.
  15. To match actual charges with expected charges, based on information on the purchase order, select the Match charges check box.

Watch this video to learn about the invoice validation policy.

Vendor invoice policies

Vendor invoice policies, set up in Accounts payable > Policy setup > Vendor invoice policies, let you evaluate vendor invoices for compliance with policy rules that you create. Vendor invoice policies are run when you post a vendor invoice by using the Vendor invoice page and when you open the vendor invoice Policy violations page. You can also configure the vendor invoice workflow to run vendor invoice policies every time that you submit an invoice to workflow.

Vendor invoice policies do not apply to invoices that were created in the invoice register or invoice journal.

This video explains how to set up vendor invoice policies. Vendor invoice policies are run when you post a vendor invoice from the Vendor invoice page.