3.3 Matching Invoices to Purchase Orders, Receipts and Consumption Advice
Key Takeaways
Matching creates invoice lines from PO schedules and distributions from PO distributions, and it updates the billed quantity and amount on the PO.
2-way matching checks the ordered quantity, 3-way adds the received quantity, and 4-way adds the accepted quantity; the 4-way hold is called Quality.
The Price hold compares the weighted average price of the matched invoice and its price corrections with the PO unit price times one plus the tolerance percentage.
A final match finally closes the PO; under budgetary control this releases funds for quantities that weren't received or invoiced.
For expense items accrued at receipt, invoice price variance goes to the invoice price variance account; for period-end accrual all variances go to the PO charge account.
Matching is how Payables makes sure you only pay for what was ordered, received or consumed. It falls under Describe Supplier Invoices processing, and it is behind most tolerance and hold questions (section 4.1).
What matching does
When you match an invoice to a purchase order, the process:
- creates invoice lines from the PO schedules;
- creates invoice distributions from the PO distributions;
- updates the billed quantities and amounts on the PO schedules and distributions.
If you match to a schedule that has several distributions, the matched amount is prorated across them. If you match to specific distributions, only those are billed.
You can match one invoice to several POs and several invoices to one PO. On the Match Invoice Lines page, only POs (and receipts) with the same legal entity as the invoice are offered. Entering an Identifying PO at the start fills in the supplier, legal entity and default payment terms.
Other match targets
- Receipts. Match to the specific receipt being billed. This avoids holds when you pay for partial shipments and usually gives smaller conversion rate variances. Oracle calls receipt matching critical if you use periodic costing in Cost Management.
- Receipt charges. Match a freight, tax or miscellaneous invoice, for example from a separate carrier, to the receipt it relates to. The charge becomes part of the goods' cost without changing the PO's billed quantity.
- Consumption advice. Pay for consigned goods that have been used.
- Negative PO lines (supplier credits). Match separately to the item line and the negative credit line, for example a trade-in on new equipment.
- Match in Full. Enter the PO number, invoice date and invoice number to bill the whole PO in one step. It isn't available if the invoice match option is Receipt, if the supplier or PO uses self-billing, or if the PO is already partly invoiced.
Match approval levels and matching holds
The match approval level decides which quantities validation checks:
| Level | Checks | Hold when exceeded (quantity basis) |
|---|---|---|
| 2-way | Billed quantity versus ordered quantity, and price | Qty Ord, or Max Qty Ord for the absolute tolerance |
| 3-way | Adds billed versus received quantity | Qty Rec, or Max Qty Rec |
| 4-way | Adds billed versus accepted quantity (inspection) | Quality (quantity billed is more than quantity accepted) |
On any level, the Price hold applies when the weighted average unit price of the matched invoice and its price corrections is above the PO unit price × (1 + price tolerance %).
Services and other amount-based matches use amount holds instead:
- AMT ORD and AMT REC for the percentage checks.
- MAX AMT ORD and MAX AMT REC for the absolute amounts.
Amount-type holds for both bases:
- Max Ship Amount: invoice versus schedule amount.
- Max Rate Amount: conversion rate variance.
- Max Total Amount: the two combined.
Matching holds allow accounting and can be released manually. The normal fix is to correct the PO or invoice, enter the receipt or acceptance, or change the tolerance, and then revalidate. Section 4.1 lists the tolerance fields behind each hold.
Two related holds:
- Matching Required comes from Hold unmatched invoices.
- Final Matching is placed when an invoice is matched to a PO that another invoice already final matched. To clear it, reverse the distribution and revalidate.
Final matching
When Allow final matching is enabled in invoice options, a user can mark a match as the final match, meaning no more invoices are expected. Oracle's budgetary-control FAQ describes the effect: the purchase order is finally closed, releasing funds for quantities that weren't received or invoiced. Example: a PO for USD 1,000 has one invoice for USD 600, and that match is final. Final closing releases the remaining USD 400 to available funds.
Final matching can't be undone casually. A later invoice matched to the closed PO gets a Final Matching hold. If the final-matched invoice is held, the related Can't Try Final Close hold stops the close until that hold is released.
Corrections
| Correction | Purpose | Document |
|---|---|---|
| Price correction | Changes the unit price of a matched invoice; doesn't change the billed quantity | Standard invoice for an increase, credit or debit memo for a decrease |
| Quantity correction | Changes the quantity of a matched invoice; doesn't change the unit price | Credit or debit memo. PO distributions can be allocated. |
| Amount correction | Changes the amount of an unmatched invoice or one matched to a services PO or receipt | Standard invoice (positive) or credit or debit memo (negative) |
Price corrections feed into the Price hold. Oracle's example: an invoice for 2 units at USD 350.00 plus a price correction of 2 units at USD 5.00 gives a weighted average of ((2 × 350) + (2 × 5)) / 2 = USD 355.00. That figure is compared with the PO price plus tolerance.
Accrual method and variance accounts
Accrual method and item type decide the accounts on matched distributions:
- Inventory items always accrue at receipt.
- Expense items follow the Common Options Accrue expense items setting (at receipt or period end). You can change a receipt default to period end on the PO schedule.
| Item and accrual | Invoice distribution | Quantity variance | Invoice price variance | Conversion rate variance |
|---|---|---|---|---|
| Expense, at receipt | Expense accrual account | Expense accrual account | Invoice price variance account | Conversion rate variance gain or loss account |
| Expense, period end | PO charge account | PO charge account | PO charge account | PO charge account |
| Inventory (always at receipt) | Inventory accrual account | Inventory accrual account | Invoice price variance account | Conversion rate variance gain or loss account |
With receipt (perpetual) accrual, the receipt debits receipt inventory and credits uninvoiced receipts. The invoice then debits the accrual and credits the liability. With period-end accrual, nothing is accounted at receipt or delivery. The invoice debits the expense and credits the liability. Uninvoiced receipts are handled at period end by Create Uninvoiced Receipts Accruals, which creates a reversing journal (section 8.4).
Variance distributions are created at invoice validation. Tax rate variance can appear when the nonrecoverable tax on the invoice differs from the PO's.
A PO line for 500 parts uses 4-way matching. The dock receives 500, inspection accepts 450 and rejects 50, and the supplier invoices 500 at the PO price. Which hold does validation place?
Qty Rec, because the received quantity is less than the ordered quantity
Price, because rejected units change the weighted average price
Quality, because the quantity billed is more than the quantity accepted
Matching Required, because 4-way matches need a receipt-matched invoice
A PO for USD 1,000 requires budgetary control. The supplier sends one invoice for USD 600 and says no more invoices will follow, so the clerk final matches it. What happens to the remaining funds?
They stay encumbered until the PO is manually cancelled in Purchasing
The PO is finally closed, and USD 400 returns to available funds
A USD 400 debit memo is created against the supplier automatically
The USD 400 moves to the invoice price variance account at validation
An expense item is accrued at receipt. The invoice unit price is higher than the PO price and within tolerance, so no hold is placed. Where does Oracle record the invoice price variance?
In the PO charge (expense) account on the PO distribution
In the conversion rate variance gain or loss account
In the liability account on the supplier site assignment
In the invoice price variance account
Sections you finish are checked off in the contents.