Handling Exceptions

An invoice exception is a discrepancy between the data on the invoice and the data on the associated order, contract, or receipt. Invoice exceptions can represent a variety of issues, such as missing receipts, mismatched quantities or prices, duplicate invoices, or tax variances.

Invoice exception types can be configured by your designated SAP Ariba Administrator through the SAP Ariba Administrator dashboard or in CSV files. This configuration defines which fields to compare and what tolerances to allow for each type of exception. Each exception type has an associated permission, which allows you to set up the approval rules and designated exception handlers for each kind of exception. You can also specify absolute tolerances based on the difference between the amount or quantity values on the invoice, and the expected values on the associated purchase order or contract. This allows you to define policies that accept all line items or invoices within a certain tolerance based on the PO or contract and the invoice.

For example, you can configure the system to trigger an Invoice Currency Mismatch exception when the currency on the invoice does not match the currency on the purchase order. Other common exceptions are:

• PO Amount Variance - The total amount of the invoice is greater than the total amount of the purchase order.
• Item Unmatched - The SAP Ariba solution is unable to find a matching contract, purchase order, or for service invoices, approved service sheet line item for the invoice line item.
• Over Tax Variance - The invoice line item tax amount is greater than the tax amount calculated based on your site's tax tables, and the difference is not within the tolerance set in your configuration.
• PO Received Quantity Variance - The line item quantity is greater than the order item's received quantity.

For a complete list of the available exception types, please review the Invoice Exception Types Reference guide.

Members of the Invoice Administrator, Payment Administrator, Invoice Manager, Payment Manager, Procurement Manager, or Customer Administrator group can add or modify exception types. Depending on the SAP Ariba solution they have enabled, users can start the process either from the Procure-to-Pay Manager for realms with SAP Ariba Buying and Invoicing or Payment Manager for sites with SAP Ariba Invoice Management.

Please play the video to learn about managing exception types.

Manually reconciling an invoice involves a series of steps in which one or more users investigate and resolve errors and exceptions. The following steps describe the overall process of manually reconciling an invoice:

1. Review the invoice reconciliation (IR) document and decide whether to edit or reconcile the document.
   Note

   Since editing authorization is determined by your group membership, you might not be allowed to edit the IR or you might only be allowed to edit header fields.
2. Decide whether you need to act on the entire invoice reconciliation document or whether you need to act on specific IR details by resolving exceptions.
3. Resolve any exceptions.
4. Adjust any advance payments that have been made for the purchase orders associated with the invoice.
   Note

   Only members of the Payment Manager group can adjust advance payments against invoices.
5. Correct validation errors and verify accounting fields.
6. Edit the approval flow.
   Note

   To learn more about approval flows, please review the Approval Flows guide.
7. Submit the invoice reconciliation.

Users can submit an invoice reconciliation (IR) document for approval. Users set as reconcilers in the approval flow must resolve the pending exceptions before the IR can move to the next node. When you submit the IR document, the approval process is regenerated based on your reconciliation actions and the next approver in the approval chain is notified. For example, if you referred one or more line items to another exception handler or approver, then that user is inserted into the approval flow as an active approver; if no reconciler in the approval flow was authorized to resolve validation errors, the Invoice Agent group is added to correct those errors.

As discussed in previous lessons, depending on your group membership, you might be able to view only the invoice reconciliations you are able to approve or other invoice reconciliations in the system. Invoice reconciliations that you are required to reconcile are listed in your To Do list. Their status is Reconciling and the available action is Reconcile. When accessing the document you will be taken to the Exceptions tab of the invoice. Here you can view header-level exceptions and line-level exceptions.

When an Invoice Reconciliation (IR) document has the status Reconciling, the exception handler for that document must suggest a recommended action, specifying whether to accept, dispute, or resolve that exception. You can also take additional action, as necessary such as adding comments at the line or header level or choosing Add Attachment to attach a document to the IR document.

The SAP Ariba system comes preconfigured with a set of action names, such as Accept Invoice or Accept Expected. Site administrators can modify these action names to suit the internal business needs of the company. The exception handler can take action either at the header level (affecting the entire invoice) or the line item level (affecting only a single exception).

Header-level exceptions usually have no effect on the amount paid to the supplier, and are mostly information-only. However, payment term mismatch exceptions and withholding tax exceptions can indirectly affect the amount paid to the supplier.

Line-item exceptions must be manually resolved, and many of them affect the amount paid to the supplier. They can be edited, manually matched, or allow users to accept values on the invoice, purchase order, or contract. You can also mark line-level exceptions as Defer to someone else to assign it to another user to handle the exception.

The Exceptions tab on an invoice reconciliation includes an Action pull-down menu for each exception line that allows you to select the actions you want to perform to resolve exceptions.

To resolve exceptions you can:

• Accept the data on the invoice or accept the data based on the associated purchase order, contract, or receipt.
• Refer when you are not sure how to deal with the exception, but you know someone who can. You refer the exception to an individual/role who is not otherwise on the approval flow. Suppose you are looking at an invoice where it appears that the supplier has substituted a blue widget when the PO indicated a green one. You are not sure they are interchangeable, so you don't think you should just pay the invoice. Instead you can refer it to the requester to verify that the blue one is fine and the supplier should get paid.
• Manual Match if the invoice is matched to the wrong purchase order or contract, or if the system could not find a matching order or contract and raised an Unmatched Invoice Exception error.
• Handle tax if a Tax Calculation Failed exception has been detected. The Recalculate Tax button is displayed for tax related exceptions. Most likely this indicates that your tax table does not support the configuration of the invoice. For example, you may be shipping to a destination that is not listed in the tax table, and so the comparison of the Ship From and Ship To address to calculate the sales tax fails. To resolve the exception, you must first correct your tax table, and then reconcile the exception by selecting the Recalculate Tax button.

Once the exception handler has resolved pending issues assigned to them, they can submit the IR document to the following person in the approval flow.

Please play the video to learn how to handle invoice exceptions.

To learn more about tax exception handling, please review the Reconciling Invoices guide.

If you are included in the approval flow for an invoice reconciliation document, after the IR is created and after anyone preceding you in the approval flow has either approved the document or submitted their reconciliation to you for approval, it is listed in your To Do list. If your site is configured for e-mail notifications, you also receive an e-mail notification of the required approval. The approver of an IR document is typically an Invoice Manager.

During the approval of an IR document:

• You can't deny or withdraw an invoice reconciliation document. If you do not agree with the exception handling of a previous approver or reconciler, you can re-reconcile the IR or you can reject it. If you reject the IR, all previously reconciled exceptions are changed to Rejected.
• If you reject an invoice reconciliation, or if the invoice was auto-rejected during automatic reconciliation, the status of the invoice is set to Rejected so that it matches the status of the IR. For invoices received through SAP Business Network, the invoice status is updated to Rejected on SAP Business Network, and it is the supplier's responsibility to send a corrected invoice. For invoices that were not received via Business Network, customers must inform the supplier directly.
• When an IR is fully approved, the status of the associated invoice is set to Reconciled.
• If you reject an invoice reconciliation, either through the user interface or by e-mail, your site might require that you provide comments regarding the rejection or that you choose a predefined rejection reason.

The approver can decide to reject the invoice reconciliation. It typically happens for the following reasons:

• It cannot be reconciled due to errors that require supplier correction.
• If it includes an incorrect supplier ID, which can't be edited on the IR and must be resolved after rejection.
• If invoices are routed through SAP Business Network using the Online submission method, which is visible on the invoice summary page. Suppliers don't see a change of status for those invoices if you deny the invoice; instead, you must reject the associated IR in order to change the invoice status on SAP Business Network and notify the supplier of the rejection.

If all issues have been resolved, the invoice can be approved for payment.