Invoices

Invoices are used for entering and processing bills for materials or services. They ensure that the quantities being billed do not exceed what has been received and that the prices at which they are billed match what is on the originating purchase order.

The invoice also specifies payment information such as the purchase order number, the vendor, any discounts that have been applied and so on. Cost allocation information indicates the taxes, freight, and any other additional costs or discounts applied to the invoice.

Line Items

Invoice line items are the detailed cost and transactional information associated with each of the purchased items and services being billed. An invoice line item can be adjusted to give discounts, adjustments in freight charges, or for extra costs when a refund to the vendor is needed. To grant a vendor discount, the Discount field should be set to a negative number. To return freight charges or reimbuse extra cost, the Freight or Extra Cost fields should be set to a positive number.

Invoice line items must conform to the following rules:
  • If the invoice header references a purchase order, then all purchase order lines added to the invoice must reference that same purchase order.
  • If the invoice header does not reference a purchase order, then multiple invoice line items can be added to the invoice using the Invoice Line zone.
  • If the invoice header does not reference a purchase order because it references multiple purchase orders, the purchase order line items can be added for each purchase order using the Purchase Order Line zone on the invoice record for each of the invoice lines.
    • If an invoice references a purchase order,  the total invoiced for a purchase order line item cannot exceed the receipt quantity. If the invoice quantity is more than the net received, the invoice goes into “pending resolution” state.
    • If a unit price is not the same as last posted invoice price, if any, invoice will also go into pending resolution.
    • Also, when the invoice amount does not match the PO amount within a certain range defined in master configuration, the user will see a warning or error (also based on setting in master configuration).

The invoice amount is the quantity multiplied by the unit price. Unit price is locked down to latest posted invoice if there is one, otherwise it comes from the purchase order. If the invoice line is derived from the purchase order line and involves inventory, then changes to the Discount, Freight, or Extra Cost fields would affect the AUP (Average Unit Price) because of the changes in price. If master configuration settings trigger an error, the invoice will go into pending resolution status. The tolerance value indicated in Purchasing Master Configuration regulates this behavior.

Creating an Invoice Prior to Receipt

Invoices can be created prior to receiving the line item however, the “Require Receipt for Services” setting in the Purchasing Master Configuration determines how the invoice will be processed for non-material items (The system does not look at this parameter for material items since a receipt is always required). If this setting is set to Yes, then the purchase order line items must be received for the invoice to complete. If this setting is set to No, the purchase order line items cannot be received and so the invoice will complete without a receipt.

Invoice Groups

Invoice groups can be used to group invoices together before they are sent to Accounts Payables (A/P). They can be used as an intermediate step to review a set of invoices before those invoices are processed for payment. If no invoice group is configured on the invoice header, individual invoices post as soon as they are approved.

Automatic Invoicing

In order for the system to complete automatic invoicing against a purchase order, the Auto Pay setting on both the vendor's location and on the purchase order must be set to Yes. After items are received against the purchase order, the system automatically creates an invoice with line items. When an invoice is automatically created, no additional line items can be added to the invoice and none of the line items can be deleted. If the receipt included more items received than ordered, these invoice line items are placed in Pending Resolution status when the invoice is submitted for approval. An authorized user must then change the quantity on the purchase order before the invoice can be reprocessed successfully.

Related Financial Transactions

All invoice line items result in a financial transaction. As the financial transactions are created they zero out the clearing account and make up differences, if any, if information such as the price or tax amount on the invoice is different from the purchase order.

Converted Total and Exchange Rates

Note that if your organization works with foreign currencies, there may be a discrepancy shown in the Invoice Summary section on the Invoice header between the converted total on the invoice header and the converted total calculated by totaling the line items. The converted total is derived by multiplying the invoice total by the exchange rate. This header value might be off by $.01 or more due to the slight offset that results from rounding each individual line item then calculating the header converted total. You can see a more accurate converted total by reviewing each line item individually.