Logistics invoice verification is the final step in procure to pay cycle. It begins with the vendor submitting the invoice for the goods sold. The Accounts Payable group, after receiving the invoice from the vendor, enters it in SAP. Based on the Purchase Order details, Goods Receipt, invoice data and configuration settings, the system prompts the user with messages. The user then takes one of the following action:
1), Park / Save the invoice
2), Post the invoice
Park / Save the invoice allows user to make changes later on, so that it can be posted. Once posted, the invoice is released to accounting for payment. Under certain circumstances, depending upon the configuration, the invoice can get blocked upon posting. It means that until the block is removed from the invoice document, it will not be released to accounting for payment. There is an alternative way to carry out Logistics Invoice Verification. The process is called Automatic Settlement or Evaluated Receipt Settlement (ERS). In this process, instead of vendor submitting the invoice for payment, the company creates an invoice document (based on the purchase order and goods receipt). This document is then used as the basis for payment by the accounting team.
Logistics Invoice Verification in SAP MM
Frequently used transactions:
MIRO – Enter Invoice
MIR7 – Park Invoice
MIR4 – Display Invoice Document
MR8M – Cancel Invoice Document
MRBR – Release Blocked Invoices
MIR6 – Invoice Overview Automatic Settlement
MRRL – Evaluated Receipt Settlement (ERS)
Invoice is blocked either by the system automatically or manually. The reason for blocking is usually a high variance between the PO data and Goods Receipt data as compared to the details mentioned in the invoice document. If an invoice is blocked, all the items are blocked; even if the block is applicable to a particular line item. Invoice block needs to be removed on time particularly if the invoice includes a cash discount. Delay in releasing the invoice may cause expiry of cash discount, if applicable. The most common variances which are encountered during invoice processing are:
This generally relates to the difference between quantity received and invoiced by vendor. Or quantity in the purchase order and invoiced by the vendor.
This refers to the variance of per unit price as compared to the purchase order.
This is generally invoked if the date of invoice entry is earlier than the delivery date in the purchase order.
The variances can be configured and activated as per the company posting rules. Setting up these variances helps in two ways. It allows the invoices with minor differences to go through so that a lot of time is not wasted on small differences. At the same time, these variances stop invoices from financial payment when the difference exceeds company standards thereby providing a strong control in the process.
There is a different kind of block, ‘stochastic block’ which is sometimes implemented by the Accounts Payable group. It means that certain invoices will be blocked for payment at random, so that they can be checked again. There will be no particular reason for blocking and the block will not be at any line item level. If it is set, there will be an “R” in the payment block field in document header data. It is usually based on ‘threshhold value’ and ‘probability’.
Also See: How duplicate invoice check works – SAP
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