Reconciling Invoices Automatically

Invoices can be reconciled with a combination of automatic and manual processing. The automatic reconciliation phase matches invoices to orders or contracts within tolerances defined in the configuration and refers unresolved issues to users for manual reconciliation.

In SAP Ariba, all matched invoices are validated against pre-configured invoice validation rule tolerances and a workflow process for exception handling. Essentially, you configure the system with header and line level invoice values your company is willing to auto-accept, auto-reject or manually resolve per transaction scenario. Exceptions outside tolerance levels are referred to users for manual reconciliation.

For example, you can configure your system to flag an exception anytime there is a disconnect between the supplier’s line level unit price and your contract or PO unit pricing. You decide who you want to designate to resolve this exception type. The approval flows in place for the IR routes it to the appropriate exception handler group for resolution.

Depending upon the commodity type, transaction size, cost center or receiving practice, you need to first decide which of the following two methods you will use for validation:

• Header level validation - compares invoice summary amount to order summary amount and receipt summary amount.
• Line Item level validation - triggers an exception if any line item is out of tolerance.

After the IR document is matched to the corresponding documents, the system determines whether the IR is validated or if it can be skipped. Validation is skipped if the total amount of the invoice is below a specified threshold amount. In the default configuration, the skip amount is set to 5, which represents an amount in the default currency for the site.

If the invoice is not skipped, then it will be validated. During validation, invoice line item and amount values are compared to the corresponding line item and amount values on the associated purchase order or contract (or the receipt, in the case of goods receipt-based invoice verification).

Invoices are automatically accepted if the header amount is less than a specified threshold amount or less than a specified percentage of the original order. Auto-accepted invoices are automatically reconciled.

In the default configuration, the auto-accept amount is set to 10, which represents an amount in the default currency for your site, and the auto-accept percentage is set to 15. For example, suppose you have a $100 purchase order that has not yet been invoiced, and an IR for $11, which represents slightly more than 9% of the order amount. Since the auto-accept percentage is 15%, the invoice is automatically reconciled.

Invoices are automatically rejected if an invoice exception defined for automatic rejection is triggered. For example, in the default configuration, the Invalid Invoice Date exception causes an invoice to be auto-rejected. Such an exception is triggered if the invoice date is earlier than the associated purchase order date.

Auto-rejected invoices are sent back to the supplier with the status Rejected. Suppliers on SAP Business Network can resubmit rejected invoices after correcting errors. Depending on your site's configuration, resubmitted invoices might use the same invoice number or a new unique invoice number. Resubmitted invoices re-enter the invoicing process at the beginning.

The automatic reconciliation phase always creates an invoice reconciliation document and submits it for approval, even if the automatic reconciliation process has indicated that the document should be auto-accepted or auto-rejected. The approver can see the results of the automatic reconciliation and can either approve it or continue to make changes. For example, an approver can use the Cancel Reject command to change the auto-reject recommendation or edit the line items to suggest an alternative reconciliation.