MANUALS > Link > Link Transaction Codes > Invoice Authorization Tolerance

Invoice Authorization Tolerance

The System Transaction Codes are displayed with both the Code Names and Descriptions. The Code Descriptions directly illustrate their functionality and role in the system, as fields are populated and tasks are performed.

Available Functionality:

The Invoice Authorization Tolerance codes are set up per order type (Purchase Order, Repair Order, etc.). Here you will define if the system will “tolerate” any variances between the dollar amount appearing on the order versus the dollar amount appearing on the invoice received. See below for an example of the tolerance threshold process.

Select into the order type and choose Update Record or click into it and select New Record to create a new code. The system displays the following:

The following information/options are available in this window:
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System Code Description

Description of the Transaction Code. The following are the possible entries for the System Code:

• P/O: Purchase Order
• R/O: Repair Order
• E/X: Exchange Order
• L/O: Loan Order
• S/V: Service Order

Invoice Tolerance Percent

Enter the percentage amount that will be tolerated (allowed) between the dollar amount appearing on the order and the dollar amount appearing on the invoice received.

Note: Both the Invoice Tolerance Percentage and an Amount must be specified.

Amount

Enter the dollar amount that will be tolerated (allowed) between the dollar amount appearing on the Order versus the dollar amount appearing on the invoice received.

Note: Both the Invoice Tolerance Percentage and an Amount must be specified.

User

When an item is Out of Tolerance parameters, a notification will be sent to the user who created the Order being invoiced. If a user is selected/entered here, the notification will be sent to this specified user instead of the Order creator.

Note: The user must exist in the security explorer to be entered here for proper functionality.

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Invoice Tolerance Functionality:

Invoice tolerance limits help facilitate the invoice authorization process: the tolerance level helps limit the amount that an invoice can exceed the authorized order cost. If the invoice amount exceeds the authorized order cost but remains within the tolerance level, then accounts receivable can post the invoice without seeking further authorization from the department that authorized the order cost. If the invoice amount surpasses the tolerance level set for the order cost, then the department that authorized the order cost will need to authorize the invoice amount.

For example, the invoice tolerance levels for purchase orders (P/O) is 5% of the order cost and/or $50.00 over the order cost.

The following P/O is created and authorized at a total cost of $500.

The received invoice for the P/O is $530.

When the P/O is linked to the invoice and the invoice details are saved, the following warning pop up appears blocking the invoice from being posted. This takes place because, although the invoice amount ($530) is under the tolerance amount ($50), the invoice amount ($530) is greater than the tolerance percentage ($25).

• Tolerance Amount: 50 + 500 = 550
• Tolerance Percentage: (.05 x 500) + 500 = (25) + 500 = 525

In order for the invoice to be approved, the invoice total ($530) must be below both the tolerance amount ($550) and below the tolerance percentage ($525). This invoice amount requires further authorization.

Now let's look at an example where the invoice amount came is $508.

Although the invoice amount ($508) surpasses the authorized order cost ($500), the invoice amount is within the tolerance threshold. The invoice can therefore be posted without further authorization.

Note: When Switch APINCLST-RL is set to Yes and the Config Other field is populated with RELEASED, the Invoice Closing pop up will ask to set the invoice status to Released. Select Yes and the invoice can be closed or reopened via the Invoice Release Selection window.

Additional Functionality:

An invoice item with a unit cost less than or equal to the amount specified in its corresponding transaction code’s invoice tolerance amount will not be placed on hold status on the invoice. However, if it has a unit cost greater than the invoice tolerance amount, it will automatically be placed on hold status on the invoice.

For example, the invoice tolerance amount for Freight has been set to $100.00.

On an invoice, with a new item added to match the transaction code with a unit cost less than the invoice tolerance amount, it is placed in an open status.

On an invoice, with a new item added to match the transaction code with a unit cost equal to the invoice tolerance amount, it is placed in an open status.

On an Invoice, with a new item added to match the transaction code with a unit cost greater than the invoice tolerance amount, it is placed in a hold status.