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Enable each source you want to use by checking its check box. For each source, enter a rank (1 is searched first), and give each source a unique, consecutive number starting with 1.

Note that two Payables options supersede the hierarchy you define. If you enable the Enforce PO Tax Name option, Payables always searches first at the Purchase Order Level for purchase order matched documents. If you enable the Enforce Tax From Account option, Payables always searches next at the Natural Account. If the invoice is not purchase order matched or if you have not enabled the Enforce PO Tax Name option, Payables checks the Natural Account first.

Enforce Tax From Account. Enable this option if you want to enforce the relationship between the tax name and the expense or asset account for distributions. If the following conditions are true then Approval will check that for every account to which you have assigned a tax name, the tax name matches.

• You have enabled the Enforce Tax From Account option.

• You have assigned tax names to accounts in the Tax Options window in General Ledger.

• You have disabled the Allow Tax Code Override option in the Tax Options window in General Ledger.

If you enable the Enforce Tax From Account option, then during Payables Invoice Import and Payables Open Interface Import the system checks the tax names of all accounts that have tax names assigned to them. If the tax name is incorrect, Payables will not import the invoice or expense report and will list it as an exception.

If you enable this option we recommend that you rank Account at or near the top of your source hierarchy to minimize holds.

See also: Deriving Tax From a Natural Account - Account Method

Attention: Do not enable this option if you enable the Enforce PO Tax Name or if you use Automatic Tax Calculation at the Header level. Since you can't enforce the correct natural account at the purchase order or at the invoice header level, this may cause frequent holds during Approval.

Enforce PO Tax Name. Enable this option if you want Payables to verify that the tax name assigned to an invoice matches the tax name on the purchase order to which you matched. If you enable this option, the primary tax name default will be from the purchase order, if the purchase order has a tax name. This is regardless of the rank you assign to the PO for Matched Invoices source in your Tax Name Defaults hierarchy. See: Defaulting Tax Names.

If the purchase order shipment to which you matched is defined in Purchasing as taxable, and the tax name on the invoice and the purchase order are not the same, Approval automatically places a Tax Difference hold on the invoice. Approval also places a Tax Difference hold on an invoice if the invoice and purchase order tax name are the same and the purchase order shipment to which you matched is non-taxable. Payables releases the hold when you submit Approval after correcting the tax name on the invoice or on the purchase order to which you matched. You can also manually release a Tax Difference hold in the Holds window and the Invoice Actions window.

Note: If you enable this option we recommend that you do not also enable the Enforce Tax From Account Payables option in the Tax Name Defaults region.

Tax Name Defaults.

• PO for Matched Invoices. For purchase order matched invoices, if the purchase order is taxable, Payables defaults the tax name from the purchase order shipment. If the purchase order shipment has no tax name assigned to it, Payables continues its search for a tax name at the next ranked source.

You must enable this option if you want to enable the Enforce PO Tax Name option in the Payables Options window. If you have enabled the Enforce PO Tax Name option in the Payables Options window, then when defaulting a tax name to a purchase order matched document, Payables will always search at this source first, no matter what rank you have assigned to it.

• Supplier Site. Invoice Tax Name value you entered in the Invoice Tax region of the Supplier Sites window.

• Supplier. Invoice Tax Name value you entered in the Invoice Tax region of the Suppliers window.

Note: If you use the Multiple Organization Support feature, you cannot enter a value for Invoice Tax Name in the Suppliers window, and you cannot select the Supplier option for your Tax Name Defaults in the Payables Option window.

• Account. Tax Name value you assigned to the expense or asset account in the Tax Options window in General Ledger. For more information see: Deriving Tax From a Natural Account.

You must enable this option if you enable the Enforce Tax From Account option. Note that if you enable the Enforce Tax From Account option, Payables will always search for a tax name from the Account source either first or second, regardless of the rank you assign here. It will search at the purchase order level first only if you have also enabled the Enforce PO Tax Name option and the invoice is purchase order matched.

• Financials Options. Value you entered for Tax Name in the Financials Options window.

• Invoice Header. Value you enter for Tax Name in the Invoices window. This source is used only for providing a default for invoice distributions.

• Template. Template you use to create an invoice or invoice distributions: Distribution Set, or expense report template.

Attention: If you use zero-rated taxes in Distribution Sets or Expense Report templates to indicate that lines are non-taxable, then rank Template high in your hierarchy to ensure that that the zero-rated taxes are not overwritten by other sources.

Note: When Payables creates invoices from recurring invoice templates, the tax name defaults from either the purchase order or the Distribution Set.