Implementing Supplier Invoices
What this domain tests
This domain tests the supplier invoice lifecycle: capture, validation, matching, holds, approval, accounting, and payment readiness. Expect questions on invoice types, sources, validation failures, matching levels, and the difference between a hold and an approval.
Core rules
- Invoice types include standard, credit memo, debit memo, prepayment, interest, withholding tax, and expense report. A credit memo reduces a supplier balance; it is not a negative standard invoice for every purpose.
- Invoices enter manually, by spreadsheet, through the supplier portal, by imaging or IDR, or through the Payables Open Interface. Interface import validates data before creating invoices.
- Validation checks supplier and site status, invoice date and accounting period, currency, tax, matching, and duplicate invoice number. Failed validation creates a system hold.
- Matching levels are two-way (invoice to PO), three-way (invoice to receipt), and four-way (invoice to receipt and inspection). Tolerances are set for quantity, price, amount, and percentage.
- Holds are system-generated or manual. Approval is a separate workflow; an approved invoice can still be on hold, and a released hold does not itself approve the invoice.
- Accounting is created in the subledger and transferred to General Ledger. The invoice accounting date controls the GL period, not the invoice date alone.
Worked example
A PO is for 100 units at $10. The receipt is 90 units. The supplier invoices 100 units. With three-way matching and a 5% quantity tolerance, the invoice quantity exceeds received quantity by 10%, so validation places a matching hold. Paying the invoice requires releasing the hold, correcting the receipt, or changing the tolerance with proper authority.
Traps
- Treating validation as approval.
- Thinking a credit memo is a payment.
- Using invoice date as the accounting date.
- Releasing a hold without checking the underlying match.