For very small variances it is not worth performing extensive research. For this reason, you can set up tolerance limits for each type of variance in Customizing for Materials Management under Logistics Invoice Verification → Invoice Block → Set Tolerance Limits. If you accept a variance in an invoice item and overwrite the default value, the system checks whether the variance is within the tolerance limit in Customizing.
If the invoice values are within the tolerance limits, the system accepts the invoice without any further queries. This means that no message is issued and the invoice is not blocked for payment.
If the value falls below a lower tolerance limit, the system issues a message to this effect. However, the invoice can be posted and is not blocked for payment.
If an upper tolerance limit is exceeded, the system issues a message as well. Despite this, the invoice can be posted. However, the invoice is then automatically blocked for payment.
The invoice block applies to all items in an invoice. The entire invoice is blocked for payment, even if only one item in the invoice shows a variance.
You must release a blocked invoice in a separate step before it can be cleared for payment.
Blocking Reasons for Variances
With respect to variances in invoice items, some of the blocking reasons are as follows:
- Quantity variance:
For a PO, the open quantity to invoice is the difference between the delivered quantity and the quantity already invoiced. There is a quantity variance if the invoice quantity does not match with the open quantity. At the absolute upper limit, the quantity variance is evaluated on the basis of the amount in the invoice item. Therefore, invoice items with a small amount result in a relatively large quantity variance, and invoice items with a large amount result in a small variance. You can also define percentage limits for the quantity variance check, for which the system does not take the PO price into account.
- Price variance:
Price variance results if the invoice price (invoice amount divided by the invoice quantity) is not the same as the PO net price. In cases where the price in the PO is flagged as an estimated price, you can set up special tolerances.
- PO price quantity variance:
There is a PO price quantity variance if the relationship between the PO price quantity and the PO quantity in the invoice is different than at GR. PO price quantity variance can also occur if no GR has been posted. The system then checks against the relationship defined in the PO.
- Date variance:
A date variance exists if the entry date of the invoice is before the delivery date specified in the purchase order. For each item, the system performs the following calculation:
Amount * (Planned delivery date − Invoice entry date)
The system compares the result with the absolute upper limit that you define. This means that invoice items that were delayed by a short period result in a relatively large date variance, and invoice items with a large delay result in a small variance.
Postings for a Quantity Variance
Postings for a Price Variance
Price Variance – Material with Standard Price
When the materials are valuated with a standard price, the price variance is posted to a price difference account. The valid valuation price (standard price) remains unchanged both at GR and IR.
Price Variance – Material with Moving Average Price (MAP)
When there are materials with MAPs, the system posts the price variance to the stock account. If there is insufficient stock coverage for the invoice quantity, the system posts the price variance to a price difference account. If there is stock coverage for only part of the invoice quantity, the system distributes the price variance proportionally between the stock account and price difference account. If a posting is made to the stock account, the MAP changes.
Postings for Quantity Variance and Price Variance
A distinction between the following cases must be made for invoice items with quantity and price variances:
- The quantity of goods received is zero.
If the invoice is posted before the GR, the system posts the invoice value to the GR/IR clearing account.
If you then post a goods receipt with a quantity equal to the quantity already settled, the GR/IR clearing account is balanced. When there is a material with a MAP, the offsetting entry is made to the stock account. Valuation of the material then occurs for the invoice price rather than the PO price.
If, after posting the invoice, you enter a GR with a quantity greater than the invoiced quantity, the portion that has already been calculated is valuated with the invoice price, and the portion that has not been calculated is valuated with the PO price.
- The quantity of goods received is greater than zero but lower than the invoice quantity.
The GR/IR clearing account is balanced for the quantity already delivered, and a price variance is posted depending on the price control on the stock or price difference account. The system posts the invoice value for the part of the invoice quantity that has not been delivered to the GR/IR clearing account.
Postings for Purchase Order Price Quantity Variance
If the GR is entered before the invoice and there is a quantity variance in the PO price unit, the posting logic corresponds to the logic for price variances. The difference between the expected invoice amount and the actual invoice amount is posted to a stock or price difference account, depending on the valuation control of the material.
If no GR is entered, the system compares the quantity specified in the PO price unit. The posting logic is the same as that for a quantity variance.
Customizing – Tolerance Limits
In Customizing the Logistics Invoice Verification, you can set tolerances for the following variances, as per the company code:
- Quantity variances (tolerance key DQ, DW).
- Price variances (tolerance key KW, PP, PS).
- PO price quantity variances (tolerance key BR, BW).
- Date variances (tolerance key ST).
In addition, there is a tolerance key for the check on amounts (AN, AP), small differences (BD), variances to blanket purchase orders (LA, LD), and maximum changes of the MAP (VP).
You find the settings for tolerance limits in Customizing for Materials Management under Logistics Invoice Verification → Invoice Block → Set Tolerance Limits (OMR6).
The following figure shows the settings for the tolerance key PP for price variances.
If you want to make sure that a certain variance is always blocked, set the value or percentage or for the absolute upper limit to zero and select the Check limit radio button.
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