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Michael V. Milano Cheryl Ludwig Oracle Corporation • Abstract • Improve your understanding of invoice matching and provide an overview of invoice matching and setup requirements in both Oracle Payables and Purchasing. Scope I. Overview of Invoice Match Functionality II. Review of various Setup Screens III. Invoice Match Process IV. Overview of the Accounting Entries V. Troubleshooting Tips • 2-way matching (quantity billed <= quantity ordered) 3-way matching (adds quantity billed <= quantity received) 4-way matching (adds quantity billed <= quantity accepted
Purchase orders are created for Inventory Items or Expense Items. The accounting entries created by matching invoices to PO’s will be different for Inventory Items as compared to Expense Items depending on whether you accrue expense items on receipt or at period end. You can match a single invoice to multiple purchase order shipments, or you can match multiple invoices to a single purchase order shipment. Oracle Payables ensures that you match only to purchase orders for the supplier on the invoice and that the purchase order and invoice currencies match. II. SETUP The first setup step is determining which match option you are using, i.e. 2-way, 3-way or 4-way matching. This option can be setup as a default in Purchasing Options, Supplier or Supplier Site or on the PO Shipment Line. (In Purchasing, Setup > Organization > Purchasing Options > Default)
I. OVERVIEW Oracle Payables shares purchase order information from your purchasing system to enable online matching with invoices. Invoiced or billed items are matched to the original purchase orders to ensure that you pay only for the goods or services you ordered and/or received. If you are billed for an item over the amount and quantity tolerances you define in the Invoice Tolerance window, during Approval, Oracle Payables applies a hold to the invoice, which prevents payment. Oracle Payables supports three levels of matching which verify that purchase order and invoice information match within defined tolerances as follows:
(In Purchasing. Supplier Base > Suppliers > Sites > Receiving) 2 .
This option is available in the PO Shipment form “Invoice Match Option”. If you are using 4-way matching you must also enable inspection of the goods when they are received.(In Purchasing. 3 . To do this you can set the default in Receiving Options or set inspection at the PO Shipment level. Purchase Orders > Purchase Orders > PO Shipments > More) Note that in 11i. there is now the option to match to purchase order receipts as well as purchase order shipments.
Setup > Organizations > Receiving Options > Receipt Routing) Note that to require inspection. “receipt routing” should be set to “inspection required”.(In Purchasing. Purchase Orders > Purchase Orders > PO Shipments > Receiving Controls) 4 . (In Purchasing.
you cannot reopen the purchase orders. 5 . Setup > Organizations > Organizations). Once a purchase order is permanently closed.To require inspection. You must also define a Purchase Price Variance Account. Place your cursor on the inventory org and click the “others” button. In Payables Options you will need to setup the following: • Allow Final Matching. In Payables. the important setup steps are Payables Options and Tolerances. Inventory records purchase price variance on delivery into a subinventory. Select alternate region “other accounts”. Select this option to allow final matching of purchase order matched invoices. Select this option only if you want to allow the option of permanently closing the purchase orders. (In Purchasing. change receipt routing to “inspection required for this one purchase order. You must also define an Invoice Price Variance Account. Work in Process records purchase price variance on delivery into the job or repetitive schedule. You can indicate a final match when you match an invoice to a purchase order during invoice entry or when you adjust a matched invoice distribution. This account shows the difference between the purchase price on the purchase order and the purchase price on the invoice. This account shows the variance between the purchase price on the purchase order and the standard cost for all items you receive and deliver into inventory and work in process. Select Inventory Information.
You cannot override the account for a matched invoice distribution if you use encumbrance accounting or perpetual receipt accrual. you can match an invoice to a purchase order Shipment. If you select this option.• • Allow Distribution Level Matching. Select this option if you want to automatically transfer the descriptive flexfield information from the purchase order distribution to the invoice distributions when you match an invoice to a purchase order. Allow Matching Account Override. Select this option if you want to allow matching to purchase order distributions. The other important setup in Payables is the Invoice Tolerance. If you do not select this option. Invoice Tolerances are defined to allow for variances between 6 . Select this option if you want to allow override of the account for an invoice distribution created from matching to a purchase order. (In Payables. You can override the account for a matched invoice distribution in the Distributions window. • Transfer PO Descriptive Flexfield Information. you can match an invoice to one or more purchase order distributions. Setup > Options > Payables > Matching).
In the Invoice Tolerances window. In the Total Amount field. the invoice cannot be paid. If an invoice is on hold. do not enter a value in this field. enter either the percent or the quantity difference above purchase order shipment line quantity ordered that you allow suppliers to invoice. and enter tolerance levels for your purchase order matching transactions and your invoice taxes. If you do not use foreign currency. In the Shipment Amount field. enter the amount of variance you allow between an invoice amount and the amount of the purchase order shipment to which it is matched. The Define Tolerance form displays the name of the Hold that Oracle Payables will place on the invoice for each tolerance that is exceeded. In the Maximum Quantity Received field. In the Exchange Rate Amount Field. enter the percentage difference above purchase order shipment line unit price that you allow suppliers to invoice. (In Payables. select the check box for each tolerance you want to enforce. enter the amount of variance you allow between and invoice amount and the amount of the purchase order shipment to which it is matched. enter either the percent or the quantity difference above purchase order shipment line quantity ordered that you allow suppliers to invoice. Enter a value in this field only if you enter foreign currency invoices in Oracle Payables. the invoice will go on hold during the invoice approval process. Setup > Invoice > Tolerances) 7 .invoices and purchase orders and for differences in tax calculation. If a tolerance is exceeded. In the Price field. enter the total amount of variance you allow for both the Exchange Rate Amount variance and the Shipment Amount combined. In the Maximum Quantity Ordered field.
There are several types of purchase orders. including Standard.e.MISC. For the purposes of illustration. unit of measure. INVOICE MATCH PROCESS The first step in the invoice match process is to create a purchase order. Click the “Shipments” button. navigate to Purchase Orders > Purchase Orders. i. select the item from the list of values in the item field. Enter a description. MISC. If you are purchasing an Inventory Item. standard delivery or inspection required). quantity. price and need by date. Remember the value for receipt routing needs to be ‘inspection required’ to enable 4-way matching. ship to location and quantity. Planned and Blanket purchase orders. this paper will use Standard Purchase Orders for all examples.III. leave the item blank and enter a category. If you are purchasing an expense item. Site. The “Receiving Control” button allows you to enter receiving information like the receipt routing (direct delivery. 8 . Enter the PO Header information like Supplier. In Purchasing. Enter your shipment information: the inventory org. etc.
Click the “Distributions Button”. There are three values for this profile option. Close the distribution and shipment forms to get back to the purchase order header click the “Approve” button. It should be noted that accounting entries are generated when the receiving transaction processor is run. Note the distribution line type default to expense or inventory depending on the item(s) being purchased. 10 . then you must run the process as a concurrent request. immediate and batch. In Purchasing. If you select batch. The profile option RCV: Processing Mode determines when the receiving transaction processor is run. Enter the quantity and charge account information. you must receive the items. The process transfers the accounting entries to the GL_INTERFACE table where General Ledger can import the transactions and then post them to the general ledger. If you are using 3-way or 4-way matching. the receiving transaction processor is kicked off as soon as the receipt is saved. This indicates which line(s) you wish to receive. In the line tab. Save your work. Receiving > Receipts. on-line. If you select online or immediate. click the checkbox to the left of the quantity. Enter the quantity to be received. Now you can log into Payables and enter an invoice to be matched to either the purchase order shipment line or the receipt. Save your work.
or accept the default (today’s date) by using the Tab key to move to the next field. Enter invoice header information including supplier name. invoice date. Your choice of which is your default is displayed here. Enter the Invoice Date. The Invoice Type defaults to Standard. and optionally. 11 . or accept the default (today’s date) by using the Tab key to move to the next field. choose Standard. Next to the “Match” button is a field that displays the default invoice match option. Oracle Payables will print the address for this site on the payment. In 11i you can match to purchase order shipments or to receipts.In Payables. so depending on which database you are in. supplier site. Enter the Supplier or Supplier Number. To enter a basic invoice. Oracle Payables will not allow the entry of invoices in closed periods. Enter the Invoice Number from the Supplier’s Invoice. Choose the Supplier Site to which you will send payment of the invoice. Invoices > Entry > Invoices or Invoices > Entry > Invoice Batches (if batching is enabled in Payables Options). you may have to use old dates or open newer fiscal periods. invoice description. invoice number. although you can change this value when matching. Oracle Payables will not accept duplicate invoice numbers for the same supplier. Enter the Invoice Amount.
or Match Amount. 12 . Oracle Payables automatically calculates the remaining field. For each shipment you want to match. Unit Price. enter two of the following: Quantity Invoiced.Query the purchase orders to which you want to match the invoice.
Accr – Accounts Payable Inventory account IV. that is the indication that there are multiple distributions for the shipment. Click the “Match” button and enter a receipt number in the find window. Common Nomenclature: Charge A/C – account to be affected by the PO or invoice distribution IPV A/C – Invoice Price Variance Account AP LIAB – Accounts Payable Liability Account Cash – cash account Rec. Match a Standard purchase order for $10 (expense item) to a standard invoice for $10 with accrual at period end.If you want to match in further detail. To do this select receipt match option (the field next to the match button on the Invoice Workbench). unless you are using encumbrance accounting. A/C 20 AP Exp Accr. Overview of Accounting Entries The following are various examples of when encumbrance entries are created and what they should look like. the invoice distribution will default from the PO distribution. It will also populate the PO_DISTRIBUTION_ID in the AP_INVOICE_DISTRIBUTIONS_ALL table. To actually create the accounting entries. 20 Items Delivered/Receiving Transaction Processor completes Account Debit Credit Rec. When the purchase order is created and approved. Accounting entries are generated when the Receiving Transaction Processor completes. Run Create Acct Account Debit Credit Charge A/C 10 AP LIAB 10 2) 3-way match. Create a $20 purchase order for an expense item (period end accrual) and match it to an invoice for $20. Receive the items Once the Receiving Transaction Processor has completed. Upon approval of the purchase order no accounting entries are generated. you can match to purchase order distributions by choosing Distribute. Since this is a 2-way match there will be no receipt for this transaction. Invoice Matched/Approved. You can also match to the receipt rather that the purchase order shipment. When the invoice is matched. If the Distribute button is enabled. accounting entries are generated and populated in the GL_INTERFACE table. Case Scenarios: 1) 2-way match. Item Received/Receiving Transaction Processor completes Account Debit Credit Rec. you must run the Create Accounting process. A/C 20 Charge A/C 20 Invoice Matched and Run Create Accounting Account Debit Credit AP Exp Accr 20 AP LIAB 20 13 . no accounting entries are generated. which is discussed in another white paper. AP Inv. A/C – receiving account AP Exp Accr – Accounts Payable expense accrual account.
Match a standard invoice for $50. Item Received/Receiving Transaction Processor completes Account Debit Credit Rec A/C 50 AP Exp Accr 50 Item Delivered/Receiving Transaction Processor completes Account Debit Credit Rec A/C 50 Charge A/C 50 Invoice Matched and Run Create Accounting Account Debit Credit AP Exp Accr 50 Charge A/C 10 AP LIAB 60 Note: The difference in the purchase order price and the invoice price is not recorded to the Invoice Price Variance account. 5) Create a purchase order for an expense item (accrue on receipt) for $50. Item Received/Receiving Transaction Processor completes Account Debit Credit Rec A/C 40 AP Inv Accr 40 Item Delivered/Receiving Transaction Processor completes Account Debit Credit Rec A/C 40 Charge A/C 40 Invoice Matched and Run Create Accounting Account Debit Credit AP Inv Accr 40 IPV A/C 10 AP LIAB 50 Note: The difference between the purchase order price and the invoice price is charged to the Invoice Price Variance account as defined in Inventory Information form (Setup > Organizations > Organizations). Run Create Accounting Account Debit Credit AP Inv Accr 30 AP LIAB 30 4) Create a purchase order for an inventory item. (accrue on receipt) for $40. Match the purchase order to a standard invoice for $30. V. Purchase Orders PO_HEADERS_ALL Fields: po_header_id Segment1=’PO Number’ wf_item_type wf_item_key 14 . For expense items. Match an invoice for $60.3) Create a purchase order for $30 inventory item (accrue on receipt). Receive the Item/Receiving Transaction Processor completes Account Debit Credit Rec A/C 30 AP Inv Accr 30 Deliver the Item/Receiving Transaction Processor completes Account Debit Credit Rec A/C 30 Charge A/C 30 Invoice Matched/Approved. When the Transfer to General Ledger is run the price variance will show as a separate journal line. Essential Table Level Detail 1. Troubleshooting Tips A. price variances are recorded to the charge account on the purchase order distribution and not the invoice price variance account. as shown above.
you can set the field "final match" to Yes. Match a second invoice to the same PO. Match an invoice to a PO. and then match to that line. commit. when upgrading this field will be NULL. The form is called Control Purchase Orders. Example: 1. When you try to match to the line that is already closed. You can manually Final Close a PO through purchasing. Once you have final closed a PO. When you try to approve the invoice. 15 . 2. 2. You can then create a new PO line. If you have an invoice distribution which has been matched to a final closed PO. There are 2 ways of final closing a PO line: 1.C: How to remove a final matching hold. you will receive a warning message telling you that the line is already closed. Since this is a new field. There is no way to manually remove the hold. update po_line_locations_all set match_option = ‘P’ where match_option is NULL. Accounts Payable AP_INVOICE_DISTRIBUTIONS Field: po_distribution_id B: New Required Field. 2. the system must remove the hold. When you match an invoice to the PO line. There are two workarounds for this situation: Workaround #1: -------------You need to reverse the distribution line that has the final match hold. After the upgrade you will need to run the following script to populate this field. This invoice will pass AutoApproval. Purchase Orders PO_DISTRIBUTIONS_ALL Fields: po_distribution_id po_header_id po_line_id line_location_id quantity_ordered quantity_billed quantity_cancelled 5. you will get the final matching hold. The hold is placed on the invoice when you run AutoAapproval. 11i has a new required field in the po_line_locations_all table called match_option. the very NEXT time that you try to match an invoice to the PO. Purchase Orders PO_LINE_LOCATIONS_ALL Fields: line_location_id po_header_id po_line_id closed_code quantity_received quantity_accepted quantity_billed 4. Choose yes for Final Match. the invoice will get a FINAL MATCHING hold. Purchase Orders PO_LINES_ALL Fields: po_line_id po_header_id closed_code 3. the invoice will be put on final matching hold. This is on the same form where you enter the amount and quantity you are matching.
You cannot invoice this distribution line. Since the average price is greater than the PO price. So you cannot tell from this flag. which invoice was final matched. but is charged to the correct GL account. F: Descriptive Flexfields.The PO shipment line has not been matched. D . Basically. They may have seen the issue before and may already have a solution for the issue! 16 . The documentation needs to be updated to include the correct calculation.Workaround #2: -------------You can manually create a distribution line on the invoice that is not matched to the PO. Several clients have stated that they had POs with several invoices already matched to the POs. the PRICE hold comes on. The PRICE hold is because the average price of all the invoices matched to the PO is compared to the PO price. Conclusion It is our desire that this paper has helped you understand the fundamentals of Invoice Matching. In addition. D: Price Holds on Invoices. and they get a PRICE hold. the problem is as follows. Only descriptive flexfields on the purchase order distribution will be transferred to Oracle Payables. When a PO is final matched to an invoice. if you encounter a problem that requires assistance. even though the price on the current invoice is the same or lower than the PO price.The PO shipment line has been matched. too. Descriptive flexfields that appear on the purchase order header and purchase order lines do not transfer to Accounts Payables when matched. We hope that you are now better equipped to troubleshoot problems and determine what needs to be done to resolve the issue. Currently.The PO shipment line is closed. in the Matching Holds table it states: PRICE hold Invoice unit price > [purchase order unit price x (1 + % tolerance)] The "invoice unit price" needs to be changed to specify the weighted average calculation of all the invoice prices on all invoices matched to that PO. E: What do the values of the final match flag mean? In the AP_INVOICE_DISTRIBUTIONS_ALL table. Breaking Invoice Matching down should help you understand the process. The doc only states that the invoice price is compared to the PO price and the tolerance used. all other invoices for that PO are updated. NOTE: You may want to use this second workaround if the goods were already received against the original PO line. please remember to log an iTAR with Oracle Support. the FINAL_MATCH_FLAG codes mean: N . Y . NOWHERE in the documentation does it state that the "average price of all the invoices matched to that PO" is used. AND one of the invoices for this PO has been final matched. They enter an invoice where the invoice price is the same or lower than the PO price.
Cheryl Ludwig is a Technical Analyst with the Oracle Support Purchasing group. She has been working for Oracle Support for over 3 years. 17 . He has been working for Oracle Support for over 3 years.About the Authors Michael Milano is a Technical Analyst with the Oracle Support Payables group.
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