PECOS Admin » 4. Organisations » 4.3 Company Settings » 4.3.4 Financial Settlement

4.3.4 Financial Settlement


PECOS P2P provides administrators with the ability to set matching tolerances for financial settlement to be used when the financial matching process matches invoice and order values. A tolerance message can also be defined for when receipting tolerances are enabled. These tolerances cannot be overridden by the user.
fig 4.10.png

Matching Tolerances

These fields enable the administrator to set a tolerance percentage for orders which do not, in financial settlement, produce an exact match when the matching program is run. If matching tolerances are not set they default to nil and the financial match must be exact.

  • Tax Tolerance Percentage: Estimated Sales taxes entered on the order at the time of requisition creation are matched, at line level, to actual sales taxes entered on the supplier invoice. Enter here, the percentage difference allowed between estimated and actual sales tax when the invoice is matched during financial settlement. Tax tolerances are used for US Sales Tax only: for UK VAT tolerances see the Taxation section below.
  • Delivery Tolerance Percentage: Estimated delivery charges can be added to an order at the time of requisition creation. Enter here the upper percentage difference that is to be allowed between this estimated order amount and the actual amount entered on the supplier invoice during financial matching.
  • Order Tolerance Percentage is used when the matching program matches the extended line level order values with extended line level invoice values. It will allow a value to vary by the percentage entered but still be defined as a “perfect match” by the system. The percentage entered can be up to two decimal places only.

When a percentage tolerance only is set, the matching process uses the tolerance percentage to match the order line value above or below the invoice line value.

Example: If a 4% tolerance is set.

An invoice line item between £96 and £104 will correctly match to an order line item for £100 because it is within 4% upper and lower boundary difference.

However an invoice line for £95.99 and less or £104.01 or more will mismatch because it is outside the 4% difference.

  • Order Tolerance Value is used when the matching program matches extended line level order values with extended line level invoice values. It will allow a value to vary by the amount entered but still be defined as a “perfect match” by the system.

When a value tolerance only is set, the matching process uses the tolerance amount to match the order line value above or below the invoice line value.

Example: If a value of £1.50 is set as a value matching tolerance and the extended price for an item is £15.00. If the invoice extended price is:

£13.49 and below = lower bound is outside of tolerance and will mismatch for price

£16.51 and above = upper bound is outside of tolerance and will mismatch for price

Between £13.50 and £16.50 = within tolerance and will match OK for price

  • Order Tolerance Percentage and Value can both be defined.

If both a Percentage and Value tolerance is set, the system will apply the lower of the two after calculating the difference.

Example: A value of £0.50 (i.e. 50 pence) is set as a value matching tolerance and a percentage of 5% is set as a percentage matching tolerance.

If an order contains a line for 5 units @ £15.20 each and an invoice is received for 4 units @ £15.30 each = £61.20:

The adjusted extended price for the order to be used for matching tolerance purposes (based on the quantity invoiced) is 4 x £15.20 = £60.80

The percentage tolerance is calculated at +/- £3.06 (being 5% x £60.80).

Therefore the tolerance to be used will be the lower of £0.50 and £3.06: which is £0.50.

There the invoice will not be mismatched because the actual difference between the order extended price and invoice extended price £0.40 (i.e. £61.20 less £60.80) which is within tolerance of £0.50.

Receipt Tolerance Message

If receipt tolerances are enabled (see Dynamic Options), over receipting is allowed only within set tolerances (see Catalogue Items and Maintain Categories > Receipt Tolerances for setting tolerances). Therefore, if the receipt amount is greater than the order amount and outside of the set tolerance percentage, an error message will display to advise the user that the amount entered is not allowed. The default error message is displayed below:
Fig 4.11 - Default receipt tolerance message.png

Company Settings allows this default Receipt Tolerance Message to be changed. Enter the text that you wish to appear in place of the default message.

For example, it might be your organisation’s policy to create change orders to ensure that there are no receipt mismatches in PECOS P2P or your Financial Management System. Receipt Tolerance Message formatting allows you to enter appropriate text to advise your users of the appropriate course of action.

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