The process to approve Payable invoices and credits, and what to do for disputed amounts for ERP users.
Handling Disputed Invoice Amounts
Check if the invoiced price is correct
Approve but dispute some amounts
- Approve but dispute and request a credit (overcharged amount)
- Approve but dispute, don't request credit (goods already returned)
Processing a Credit Note for a disputed amount
Pricing incorrect on your Purchase Order
Invoice Price differences from extra freight charges
Introduction
This guide describes the process to approve Payable invoices and credits and what to do for disputed amounts.
The workflow for a Payable invoice is driven by a Purchase Order.
When ordered goods are received in at your warehouse, they should be receipted in, and the Delivery Note number assigned to the Purchase Order. Only then can an Invoice be processed for approval.
A Delivery Note and an Invoice may cover all or some of the items on a Purchase Order. You can select which lines of the Purchase Order are to be included on each Invoice.
In the Approve Invoices screen, only the Purchase order lines for goods that have been Received In will be available for approval. If the goods have been partially received, then the number and value of those received goods will be able to be approved.
If part of the invoice is disputed, you have the option of approving the lines that are agreed and requesting a credit for items that are incorrectly priced or have already been returned.
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NOTE: If you want to create duplicated invoice numbers for the same Supplier, you can tick the checkbox for Allow duplicate invoice in either the Payable Invoices > New Payable Invoice screen, or the Create sundry Payable Invoice screen. |
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TIP: Invoices without a Purchase Order Any invoice that does not have a Purchase Order is classified and processed as a Sundry Invoice. Refer to Add a Sundry Payable Invoice to read about this feature. |
Approval Process
Invoices arrive by email or post and the printed invoices are held until processing.
To process an invoice:
- Go to Payables > Approve Payable Invoice.
This screen has a lot of information. Here is a view of the entire screen, and below are smaller sections relating to each step in the approval process.
Using the information from the invoice:
- Enter the Purchase Order number or search for it by Purchase Order or Supplier. The goods on the Purchase Order must be fully or partially received before you can proceed.
The Delivery Note lines that have been created for this Purchase Order will display in the first section below. The Delivery Note number will be displayed on this line.
Most frequently, there will be one Delivery Note per Invoice. However, if there are two or more Delivery Notes for your Invoice, you can select the appropriate lines from the top section.
The individual Purchase Order lines that have been received in will be displayed in the bottom section of the screen.
- In the top section of the screen, tick the Delivery Note line/s that are included on this Invoice.
This will then display, in the bottom section of the screen, the Purchase order lines that have been received in.
- Tick the Purchase Order lines that are included on this Invoice and that you wish to approve.
- Enter the Supplier's Invoice number.
- Enter the Supplier's Invoice date. Refer to Keyboard and Date Shortcuts in Lentune to read about the shortcuts for entering dates.
- Enter the Supplier's Invoice total (including tax).
Note: You should enter the full invoice amount, including tax, even if you are disputing some items.
- Compare the Supplier's Invoice total with the Disputed amount/variance amount. If the Disputed amount/variance is now zero, then the invoice amount matches the amounts on the Purchase Order lines and you can now approve the invoice for payment.
- Click Approve.
The invoice will now be available for payment in your Cashbook.
TIP: If your invoice relates to a previous month, and has only just been entered, you can select the appropriate Supplier Due date. Refer below to read about this.
Disputed amount/variance
Where you do not agree the amount of the invoice and have not selected all the Purchase order lines that are displayed, there will be a Disputed amount/variance.
Once you have entered the Invoice amount, the Disputed amount/variance field is calculated from the difference between the sum of the Purchase Order lines that you have selected to pay and the Supplier's Invoice total.
If you approve all Purchase order lines, and the Invoice prices match the Purchase order prices, the Disputed amount/variance will be zero.
If the Disputed amount/variance is not zero, you will need to ascertain how the variance has occurred.
You may then Approve the remainder of the invoice and request a credit, e.g., if the pricing is incorrect; or Approve the remainder of the invoice and not request a credit, e.g., where the goods have been returned and the warehouse staff who have receipted in the goods have already requested a credit.
A price variance may arise from the Supplier overcharging, or the price on your Purchase Order being incorrect. When a Purchase Order is created, the price of an item is taken from the Payable contract. Therefore, having your Payable contracts up to date facilitates the processing of Payable invoices. Please refer to Supplier Price Files (Payable Accounts) to read about this.
Click Handling disputed Invoice Amounts to read about how to manage Price variances.
Handling Disputed Invoice Amounts
A dispute in the invoice amount can arise from the Supplier overcharging, or the price on your Purchase Order being incorrect. When a Purchase Order is created, the price of an item is taken from the Payable contract for the item being invoiced, so this needs to be kept up to date by ensuring that you have the latest prices from your Suppliers.
The way you deal with a price variance depends on how the variance has arisen. Therefore you need to ascertain what caused the difference, i.e. if the Supplier has overcharged on the invoice, or if your price is incorrect.
Check if the invoiced price is correct
- On the Approve Invoices screen, with the invoice selected, look at the Purchase Order lines in the bottom section of the screen.
- Click the More icon
(three horizontal dots) on the far right of a line.
- Select Bought History.
The screen shows the Invoiced price history for this Stock item in the Last bought details section at the top of the screen, and pricing for Purchase order pending (i.e. not yet invoiced) in the lower section of the screen.
These can be viewed for the current Branch or for All branches by selecting the appropriate tab.
Also displayed are:
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- The Contract buy price which shows the Replacement cost, (click here to read about Replacement cost), and
- The Standard cost. The Standard Cost is taken from the Stock record, but it does not take into account Quantity ordered or Branch for this invoice, which may also affect the pricing.
The Contracts tab displays details of the Payable contract pricing:
Once you have ascertained if the price is correct, you will be able to Approve the part of the invoice that is correct, and dispute the remainder that needs attention.
Another warning that the price may need checking may be displayed when you select the line to approve. If the price has been detected to be different to the last purchase price, you will see a warning and you will be asked if you wish to continue.
- If you wish to proceed, click Confirm to continue.
Approve but dispute some amounts
Where you do not wish to approve some of the amounts on the invoice, you can approve the remainder of the invoice and dispute the amounts in question. There are two ways to do this, depending on whether or not you need to request a credit from your Supplier.
Approve but dispute and request a credit (overcharged amount)
Where the Supplier has overcharged on the invoice, you can approve items that you are ready to pay, and hold payment for those items that have been overcharged, while requesting a credit from the Supplier.
In the example below, we want to pay the second line and dispute the first line.
- Tick the Purchase order line/s that you agree and wish to pay.
- Enter the full value of the invoice (including the amount that is in dispute). Now you will see the amount of your disputed lines in the Disputed amount/variance field.
- Enter a Disputed reason.
- Click Approve but dispute, request credit (pricing issue).
This will then allow the agreed amount to be paid, and put the disputed amount on hold.
It will send a credit request to the Supplier with the reason that you entered.
It will create a negative Delivery Note for the amount in dispute.
When a credit is received from your Supplier, you can then process this against the same Purchase Order. Please refer below for how to do this.
Approve but dispute, don't request credit (goods already returned)
Where part of the invoiced amount is disputed because the items have already been returned from the warehouse:
- Tick the Purchase order line/s that you agree and wish to pay.
- Enter the full value of the invoice (including the amount that is in dispute). Now you will see the amount of your disputed lines in the Disputed amount / variance field.
- Enter a Disputed reason.
- Click Approve but dispute, don't request credit (already returned). In this situation, your warehouse staff should have already requested the credit.
This will then allow the agreed amount to be paid, and put the disputed amount on hold.
It will create a negative Delivery Note for the amount in dispute.
When a credit is received from your Supplier, you can then process this against the same Purchase Order. Please refer below for how to do this.
Processing a Credit Note for a disputed amount
Where you have a disputed amount on an invoice, you will have sent a Dispute and request credit, or Dispute and don't request Credit to your Supplier.
Clicking either of these options will then allow the agreed amount to be paid, and the disputed amount will have been put on hold.
A credit request will have been sent to the Supplier with the reason that you entered.
A negative Delivery Note for the amount in dispute will have been created.
The Purchase Order will show a status of Partially Invoiced.
When the Credit note arrives from the Supplier, it should use the same Purchase Order number as the original invoice. We then match that Credit note to the credit Delivery Note.
In the Approve Invoices screen:
- Select the Purchase order.
The disputed line/s and the credit will be selected.
| NOTE: There may be a small discrepancy in the amount calculated for the credit. As long as this is within the acceptable tolerance as set in the Permitted rounding variance amount field in Settings > Payable Manager > Manager details, the credit can be approved. |
- Enter the new Credit number and date.
You now must release the disputed amount on the original invoice.
On the right of the centre section of the screen, you will see the disputed amount, with the tick icon on the right hand side.
- Tick this icon for the line to be released so you can approve the credit.
- Click Approve.
Pricing incorrect on your Purchase Order
Where the pricing on your Purchase order is incorrect, then you can update the Purchase order to reflect the correct price.
- Go to Payables > Approve Payable invoices.
- Select the Purchase order.
- Select the appropriate Delivery Note in the top section.
- In the lower section showing the Purchase order lines, you can now edit the price for the item.
- Enter the invoice number, amount and date.
If this now matches the invoice, you can Approve the invoice.
Invoice Price differences from extra freight charges
Where an additional freight amount has been charged on your Supplier invoice, you can add that to the Purchase order so that the Purchase order amount matches the invoice.
Below the Approve section on the right of the screen:
- Enter the Extra freight amount.
Now you have the option of either:
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- Allocating the freight proportionally across all items. Do this where you wish to reflect this additional charge in the cost of the items. When you approve the invoice, this change will be reflected across your Branch average cost;
OR:
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- Adding freight, which adds a new Purchase order line as a separate item, and does not affect the value of the stock items.
- Click either Allocate freight or Add freight.
You can now continue with the Approve process.
Invoice Price differences from additional items
The Supplier invoice may have additional items, such as a restocking fee from returned goods. You can enter this as a New Item in order to balance the invoice.
Refer to Add a Restocking Fee to read about this.
Approving an older dated Invoice
If you have an invoice with a date from a previous month, you can enter it in the current system month, but you may wish to edit the Supplier Due Date, rather than accept the Supplier due date from the system. For example, the system may expect the due date to be the 20th of the following month when actually it's the 20th of this month.
In this case, you can select Override Supplier Due Date from the field beside the Approve button and select the date you want.
Override Supplier Due Date: Click the calendar icon beside this field to select the due date that you want.
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