Logistics Invoice Verification

Logistics invoice verification is the final step in procure to pay cycle. It begins with the vendor submitting the invoice for the goods sold. The Accounts Payable group, after receiving the invoice from the vendor, enters it in SAP. Based on the Purchase Order details, Goods Receipt, invoice data and configuration settings, the system prompts the user with messages. The user then takes one of the following action:
• Park / Save the invoice
• Post the invoice

Park / Save the invoice allows user to make changes later on, so that it can be posted. Once posted, the invoice is released to accounting for payment. Under certain circumstances, depending upon the configuration, the invoice can get blocked upon posting. It means that until the block is removed from the invoice document, it will not be released to accounting for payment. There is an alternative way to carry out Logistics Invoice Verification. The process is called Automatic Settlement or Evaluated Receipt Settlement (ERS). In this process, instead of vendor submitting the invoice for payment, the company creates an invoice document (based on the purchase order and goods receipt). This document is then used as the basis for payment by the accounting team.

Frequently used transactions:
MIRO - Enter Invoice
MIR7 - Park Invoice
MIR4 - Display Invoice Document
MR8M - Cancel Invoice Document
MRBR - Release Blocked Invoices
MIR6 - Invoice Overview Automatic Settlement
MRRL - Evaluated Receipt Settlement (ERS)

Invoice BlockingInvoice is blocked either by the system automatically or manually. The reason for blocking is usually a high variance between the PO data and Goods Receipt data as compared to the details mentioned in the invoice document. If an invoice is blocked, all the items are blocked; even if the block is applicable to a particular line item. Invoice block needs to be removed on time particularly if the invoice includes a cash discount. Delay in releasing the invoice may cause expiry of cash discount, if applicable. The most common variances which are encountered during invoice processing are:
• Quantity VarianceThis generally relates to the difference between quantity received and invoiced by vendor. Or quantity in the purchase order and invoiced by the vendor.
• Price VarianceThis refers to the variance of per unit price as compared to the purchase order.
• Schedule VarianceThis is generally invoked if the date of invoice entry is earlier than the delivery date in the purchase order.

The variances can be configured and activated as per the company posting rules. Setting up these variances helps in two ways. It allows the invoices with minor differences to go through so that a lot of time is not wasted on small differences. At the same time, these variances stop invoices from financial payment when the difference exceeds company standards thereby providing a strong control in the process. There is a different kind of block, 'stochastic block' which is sometimes implemented by the Accounts Payable group. It means that certain invoices will be blocked for payment at random, so that they can be checked again. There will be no particular reason for blocking and the block will not be at any line item level. If it is set, there will be an "R" in the payment block field in document header data. It is usually based on 'threshhold value' and 'probability'.

Configuration Setting for Tolerance Limits:
Tolerances are defined in customizing to configure which variance to be accepted and which one to be blocked. Tolerance limit for invoice block is set at company code level. The Tolerance limit for each company code is specified here for each Tolerance Key.

The following screen shows how to set it up for tolerance key “PP” – Price Variance. It says that tolerance key PP is active for company code 2600 and the lower limit for tolerance is 5% and upper limit is $ 100.
There are also situations when the invoice, though within tolerance, is entered with a large amount. It is then recommended to block the invoice to check the amount. It can also be applicable to cases when invoices do not refer to any purchase order. To activate this check, tolerance key “AN” - Amount for item without order reference and “AP” - Amount for item with order reference, need to be configured. Subsequently the following node “Activate Item Amount Check” needs to be activated.

Configuration Setting for Stochastic Block:

In the step "Activate Stochastic Block", stochastic block is activated at company code level for desired company codes. The next step is "Set Stochastic Block" and here "threshold value", "currency" and "percentage" is entered to set the stochastic block on invoices. If the invoice value exceeds threshold value, based on the percentage (probability) block will be set on the invoices. If the invoice value is lower than the threshold value, the percentage (probability) gets reduced in proportion to the invoice value and accordingly a block is set on the invoices.

Example
Threshold value: $6000 Percentage: 50

Invoice value	Percentage or probability of a block
$7000	50 %
$8000	50 %
$3000	25 % (= 3000/6000 * 50)
$300	2.5 % (= 300/6000 * 50)

Releasing Blocked Invoices
The invoice block needs to be removed before any payment can be processed for the vendor. To remove the block, invoices can be released individually, collectively and automatically.
T Code - MRBR
Process
• Enter the selection criteria to select the desired invoices for processing.
• Process the invoice list by removing individual blocking reasons. This could be a result of workflow between buyer and Accounts Payable specialist.
• The invoice is then released, either by the buyer or the Accounts Payable resource.