CAPA (CNCF) cheat sheet

Three-way match compares purchase order, receiving report, and supplier invoice on quantity, unit price, and terms before payment approval.

Two-way match applies when no goods receipt exists, typically for services; it compares only the purchase order to the invoice.

Invoice tolerance is the allowed variance between PO and invoice amounts; variances inside tolerance auto-approve, outside tolerance route to exception review.

A debit memo reduces the amount owed to a supplier, while a credit memo from the supplier reduces the balance the buyer owes.

The AP ledger aging buckets are typically current, 1-30, 31-60, 61-90, and 90+ days past due date.

Discount terms 2/10 net 30 mean a 2 percent reduction if paid within 10 days, otherwise the full amount is due in 30 days.

Annualized cost of forgoing a 2/10 net 30 discount equals (2/98) x (365/20), approximately 37.2 percent.

Segregation of duties requires that the person who enters an invoice not also approve payment or reconcile the bank account.

Duplicate invoice detection relies on matching supplier ID, invoice number, invoice date, and amount against the open and paid item files.

P2P flow sequence: requisition, purchase order, goods receipt, invoice receipt, three-way match, payment, and reconciliation.

A purchase requisition is an internal request; a purchase order is a legally binding offer issued to the supplier after requisition approval.

Goods receipt records quantity and condition at delivery and creates the obligation that enables invoice matching in most ERP systems.

Accrual at period end is recorded when goods or services are received but no invoice has arrived; it reverses when the invoice posts.

Evaluated receipt settlement pays from the receipt record without a supplier invoice, requiring high-confidence pricing and receipt data.

Vendor master maintenance should be restricted so bank detail changes require independent verification to prevent payment diversion fraud.

Payment run controls include dual approval of the payment proposal, blocked-vendor flags, and review of payments above a defined threshold.

Key P2P metrics include cost per invoice processed, percentage of invoices matched on first pass, and days payable outstanding.

The AP control account in the general ledger must equal the sum of open supplier balances in the subledger at each period close.

A vendor statement reconciliation compares supplier-reported balances to the AP subledger and investigates unmatched items.

Positive pay matches issued check or ACH files to the bank before clearing, and exception items are returned for review.

Unclaimed property rules require escheating stale uncashed checks and dormant credit balances to the state after the dormancy period.

A receiving cutoff test verifies that goods received near period end are recorded in the correct accounting period.

A payment hold or block on a supplier record prevents disbursement until the underlying exception, such as a dispute, is resolved.

Blanket purchase orders set agreed pricing over a period and are released against by individual orders rather than renegotiated.

Consignment inventory means the buyer pays only when goods are consumed or sold, so no AP liability arises at delivery.

Early payment discount decisions compare the discount rate to the company cost of capital; take the discount when the annualized cost of forgoing exceeds borrowing cost.

Dynamic discounting lets the buyer offer early payment at a negotiated rate, capturing yield on surplus cash.

Payment methods include ACH, wire, check, virtual card, and supply chain finance; virtual cards shift rebate value to the buyer.

GR/IR clearing accounts hold the difference between goods received and invoices received and must be cleared before period close.

A procurement card program requires transaction limits, merchant category restrictions, and monthly reconciliation to expense accounts.

An invoice exception arises when quantity, price, or terms fall outside tolerance, or when no PO or receipt exists.

A non-PO invoice requires additional approval by the budget owner before payment because no pre-commitment exists.

Freight and tax lines must be validated against PO terms; unanticipated freight is a common exception cause.

Invoice date drives the payment due date under most terms; receipt date drives accrual timing, not payment timing.

A recurring invoice template is used for fixed periodic charges and still requires verification against the contract.

Statement of account review flags invoices recorded by the supplier but missing from the buyer ledger, and vice versa.

A hold queue ages exceptions; unresolved exceptions past terms create late-payment interest exposure and supplier relationship risk.

Supplier onboarding should include tax identification validation, banking verification, and sanctions or debarment screening.

The vendor master is a single source of truth; duplicate supplier records fragment spend data and enable fraud.

Purchase order approval limits are tiered by amount and must be enforced by system workflow, not manual override.

Contract compliance means invoices are paid per negotiated rates; maverick spend is purchasing outside contracted channels.

Tax rules such as withholding and VAT reverse charge depend on supplier jurisdiction and must be captured in the vendor master.

Records retention policies set minimum retention periods for purchase orders, invoices, and payment evidence for audit.

Internal control frameworks separate authorization, custody, and recordkeeping across the P2P cycle to prevent and detect error.

Days payable outstanding equals (average accounts payable / cost of goods sold) x number of days in the period.

Cost per invoice equals total AP processing cost divided by the number of invoices processed in the period.

First-pass match rate equals invoices matched without exception divided by total invoices processed.

Discount captured rate equals discounts taken divided by discounts available, measured in value rather than count.

Accrued liability at period end equals uninvoiced receipts valued at PO price plus known recurring charges not yet billed.

Invoice cycle time is measured from invoice receipt date to payment approval date and excludes bank clearing time.

Fictitious vendor fraud is detected by matching vendor addresses and bank accounts against employee records.

Invoice redirection fraud changes supplier bank details; callback verification to a known contact number is the standard control.

The audit trail must link requisition, PO, receipt, invoice, and payment by document number for every transaction.

Segregation conflicts include the same user creating a vendor and approving its payment, or receiving goods and approving the invoice.

Data analytics tests include duplicate invoice numbers, payments just below approval thresholds, and round-dollar amounts.

Emergency or after-the-fact purchase orders require retrospective approval and are a red flag when frequent.

SOX-relevant P2P controls require documented evidence of performance, such as approval timestamps and reviewer sign-off.

Net terms start from the invoice date unless the contract specifies receipt date or end of month.

End-of-month terms such as 2/10 EOM shift the discount window to the following month's tenth day.

A partial payment leaves the remaining balance open and may forfeit the discount unless the terms allow partial discount.

Payment date calculation excludes non-business days; systems roll due dates to the next business day.

A remittance advice identifies which invoices a payment settles and is required for accurate cash application.

Unapplied cash arises when a payment cannot be matched to open invoices and must be cleared during reconciliation.

Optical character recognition and invoice capture automate data entry; confidence thresholds route low-certainty fields to human review.

Straight-through processing means an invoice posts and pays without manual touch, enabled by tight tolerances and clean master data.

Workflow routing sends invoices to approvers based on cost center, amount, and commodity code from the PO.

ERP integration between procurement and AP ensures the receipt and PO data are the same records used in matching.

E-invoicing mandates in many jurisdictions require structured invoice formats and real-time reporting to tax authorities.

Automation exception rates are a primary indicator of master data quality and supplier compliance with PO rules.

Close checklist includes accrual posting, GR/IR clearing review, subledger-to-GL reconciliation, and aging review.

The GR/IR account should net to near zero at close; residual balances indicate unmatched receipts or invoices.

Uninvoiced receipt accruals reverse automatically in the next period when the invoice posts against the receipt.

Stale open items older than a defined age are investigated and either paid, written off, or escalated.

The AP aging report total must tie to the AP control account balance before the close is certified.

Cutoff procedures confirm invoices received after period end are excluded and prior-period items are captured.

Supplier scorecards track on-time delivery, invoice accuracy, quality rejections, and responsiveness.

Invoice accuracy rate equals error-free invoices divided by total invoices received from the supplier.

Payment term negotiation should reflect the supplier's cost of capital and the buyer's working capital position.

Supply chain finance allows suppliers to receive early payment funded by a bank at a rate based on the buyer credit rating.

Dispute resolution should be logged with root cause codes to drive corrective action and reduce repeat exceptions.