Proposal For 3-Way Match Vendor Bill Approval Workflow

Proposal Summary 

This proposal covers the scope of creating a 3 Way Match Vendor Bill Approval Workflow to match the rate, amount and quantity of the Purchase Order, Item Receipt and Vendor Bill. Also, the approvals will be based on the tolerance limits set on the subsidiary record.  

Requirement 
 

Develop a 3-way match vendor bill approval workflow based on the following scenarios: 

Sr No	Scenarios Description	Expected Results
1	Purchase order unit price varies from the Invoice Unit Price	Matching Exception Invoice to be placed on matching hold
2	Invoiced quantity is more than purchased quantity	Matching Exception Invoice to be placed on matching hold
3	Received Quantity More than purchase order quantity	Matching Exception Invoice to be placed on matching hold
4	Invoiced quantity is more than received quantity	Matching Exception Invoice to be placed on matching hold
5	Receipt Unit price is more than Invoice Unit Price	Matching Exception Invoice to be placed on matching hold

Scenarios#	Document Type	Unit Price	Quantity	Amount	Expected Result
Full Receipt
1	PO	100	1,000.00	100,000.00	3Way Match completed, invoice processes for payment, no approval required
1	Receipt	100	1,000.00	100,000.00
1	Invoice	100	1,000.00	100,000.00
Partial Receipt
2	PO	100	1,000.00	100,000.00	3Way Match completed, invoice processes for payment, no approval required
2	Receipt	100	500	50,000.00
2	Invoice	100	500	50,000.00
Invoice price high, Within tolerance limit
3	PO	100	1,000.00	100,000.00	Invoice within tolerance Limit, 3Way Match completed, invoice processes for payment, no approval required
3	Receipt	100	1,000.00	100,000.00
3	Invoice	110	1,000.00	110,000.00
Invoice price high, Over tolerance limit
4	PO	100	1,000.00	100,000.00	Invoice over tolerance Limit, 3Way Match completed, invoice on hold, invoice requires approval
4	Receipt	100	1,000.00	100,000.00
4	Invoice	115	1,000.00	115,000.00
Invoice Quantity high, Within tolerance limit
5	PO	100	1,000.00	100,000.00	Quantity over but within tolerance Limit, 3Way Match completed, no approval required
5	Receipt	100	1,000.00	100,000.00
5	Invoice	100	1,050.00	105,000.00
Invoice Quantity high, Over tolerance limit
5	PO	100	1,000.00	100,000.00	Quantity over exceeding tolerance Limit, 3Way Match completed, approval required
5	Receipt	100	1,000.00	100,000.00
5	Invoice	100	1,150.00	115,000.00

Deliverables 

We will create a 3-way matching workflow which will trigger when Vendor Bills are created. 

The workflow will check the Amount, Rate, and Quantity of the Vendor bill to its associated Purchase order, and Item receipt. Also, by considering the tolerance limits set on Subsidiary record, the vendor bill will be in ‘Pending Approval’ status. 

The workflow considerations will be as follows: 

• We will check the following in the 3-way matching workflow 

• Amount and Rate in Purchase Order and Bill 
• Amount and Rate in Item Receipt and Bill 
• Quantity in Purchase Order and Bill 
• Quantity in Item Receipt and Purchase Order 

• Quantity in Bill and Item Receipt 
• If the Purchase Order is partially received, the bills will be in Approved status unless the quantity, rate, and amount exceed the Purchase Order Amount, rate, and quantity tolerance. 

• On creating the Vendor bills, the workflow will check for the amount, rate, and quantity. If the quantity, rate, or amounts are within tolerance limits, then no approval needs for the bill, and the bill will be in ‘Open’(Approved) status. 
  If the quantity, rate or amount exceeds the tolerance limits, then the bill status will be ‘Pending approval’. 
• On approving the bill, it will be in Open status and will be available for payment. Also, the bill will be locked for editing for all users, other than user with administrator role. 
• The bill approver will be the Purchase Order creator.  
  We will provide a custom field in Purchase Order (Bill Approver) that will source  the PO creator automatically. But the PO creator can select a different employee in cases of expense/indirect, and PO created by bulk processing or using script. 

• The amount and rate tolerance can be set as a percentage value.  
  So the condition for exception will be as follows 
  (Amount in Bill – Amount in PO)/ Amount in PO > Amount Tolerance limit 
  The same will be applicable for rate matching calculation. 
• The quantity tolerance can be set as a difference limit. A difference limit represents an absolute quantity number that is used as the limit. 
• When the bill is in ‘Pending Approval’ status, the exception(the reason why the bill is in pending approval status) can be seen by clicking the ‘Bill Exception’ button. 
• An email will be sent to the Bill approver if a bill is in ‘Pending Approval’ status. 
• Also, if the bills get approved, an email notification will be sent to the bill creator. 
• In the multiple bill/item receipts cases, the amount and quantity will be summed up for comparison. 
  For comparing rates in this case, it will throw exceptions if any one of the records has a rate exceeding the tolerance limit. 
• The approver can reject the bill and the status will be changed to ‘Rejected’. The bill creator can make the necessary corrections to the record and resubmit it for approval. If you resubmit the vendor bill, it goes through Bill Validation again and the rest of the validation states. It is automatically approved if discrepancies are no longer found. 

Assumptions 

• The tolerance limits will be set only in subsidiary records (The tolerance limits can be set in the vendor, item, and subsidiary records). If a tolerance limit needs to be set in the item or vendor records, this will be considered as out of the scope for this proposal, and a revised estimate will be submitted. 
• The approval routing is enabled for Vendor Bills. 

• The unit of measure will be the same for the Purchase order, Item Receipt, and Bill.  
• The currency will be the same for Purchase Order, Item Receipt and the corresponding Bill. 
• The bill will not be in ‘hold’ status on exception. Instead, it will be in ‘Pending Approval’ Status. The bill will be for available for payment only if it is Approved. 

Exceptions and Limitations 

• After the approval, the bill will be locked for editing for all users other than administrators. So, the users cannot edit any fields in the approved bill. 
• The Next Approver, and Approval Status fields will be disabled in the bill so that the users cannot edit it. 
• If the Purchase Order is created by any script or bulk processing, or in case of expense/indirect the user needs to set the Bill Approver manually in those Purchase Orders. 
• The workflow will not consider the bills, if the ‘Bill Approver’ field is empty in the associated Purchase order. 
• The workflow will not consider the standalone bills (Bills without any Purchase Order or Item Receipt).