Tolerance Rules and Variance
The tolerance rule defines the variance limit set on the invoice. You create Tolerance rules to determine the permissible amount of variance that can be applied on an invoice before it exceeds the tolerance limit.
The exception engine checks if invoices with exceptions are configured with tolerance rules. If the tolerance rules are met, no exceptions are raised. You can customize tolerance rules of different types where variance is compared with tolerance percentage and tolerance value. With Tolerance types, if the tolerance value exceeds the tolerance limit then exceptions are raised. By applying Tolerance rules on invoices, you can reduce the number of exceptions raised, and bridge the gap with competitors.
Tolerance types
Accounts Payable Operations supports the following tolerance types.
- Line amount tolerance-defines the acceptable difference between the expected and actual total amount for specific items or services of invoice. It ensures easy payment processing by permitting minor variations within the defined tolerance limit. If the actual amount exceeds the expected amount but falls within the Line amount tolerance limit, then the invoice is considered valid for payment.
- Line quantity tolerance-defines the acceptable range between the expected and actual quantities of items or services listed on an invoice. It ensures easy payment processing by allowing minor differences within the defined tolerance range. In some invoices, when the actual quantity exceeds the purchased quantity but remains within the defined Line quantity tolerance limit, then the invoice is considered valid for payment. This is a line level tolerance.
- Line unit price tolerance- amounts to the differences between the purchase order line unit price and the actual price of an invoice. This rule prevents small discrepancies impacting payment processing and supplier relations. When the actual unit price falls within the specified Line unit price tolerance range, the invoice is ready to be processed for payment. This is a line level tolerance.
- Over billing amount tolerance-defines the maximum allowable amount of over billing between an invoice and the corresponding purchase order. If the actual amount exceeds the expected amount but falls within the Overbilling amount tolerance limit, then the invoice is considered valid for payment. This is a header level tolerance.