Explaining the Invoice Reconciliation Process

After the SAP Ariba invoicing solution receives an invoice from SAP Business Network, or a user manually creates an invoice in the SAP Ariba invoicing application, the next step is to reconcile the data on the invoice with the matching purchase order, receipt, or contract data to make sure the invoice is correct. The matching of the related documents can be done automatically by the system, or, if that is not possible, by an exception handler. The system allows for setting up different levels of matching.

Customers have the option to choose between a 2-way or 3-way invoice match. This choice determines whether it is sufficient to match the invoice with the corresponding order (2-way match), or if an additional record, such as a goods receipt or an approved service entry sheet, is necessary (3-way match).

Many companies prefer a 3-way match to gain an adequate understanding of their spending. Others adopt a 2-way match to simplify the process for low value purchases. For example, a 2-way match might be sufficient for low value purchases, such as office supplies. However, if the invoice is for a core purchase, for example, IT items, a 3-way match is recommended.

The invoice reconciliation process is triggered as soon as an invoice reaches the SAP Ariba Buying and Invoicing system, or if approval is required for the invoice, as soon as it is approved. The invoice reconciliation process determines whether to:

• Accept the invoice.
• Accept line items on the invoice based on the details specified on the associated orders, contracts, or receipts, and override the invoice data.
• Accept line items on the invoice based on the details specified on the invoice.
• Reject the invoice (return it to the supplier and request a corrected invoice).

In order to determine the appropriate course of action for each situation, the invoice reconciliation (IR) document goes through a specific set of steps:

1. Match the IR to the corresponding documents.
2. Validate the IR or skip validation.
3. Auto-accept or auto-reject the IR.
4. Notify the exception handlers or IR approvers that discrepancies have been found.

Note

Your SAP Ariba invoicing solution updates the status of invoice and invoice reconciliation documents, and associated payment requests, at different stages of the invoice and invoice reconciliation workflow. For a complete list of the IR statuses please review the Reconciling Invoices guide.

Please play the video to learn about the invoice reconciliation process within SAP Ariba Buying and Invoicing.