Complainer
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Either I'm missing something or you're missing something. I really don't see how insisting that the PO exactly matches the invoice gives any control. I would expect that the system checks to ensure that the invoice amount (plus any previous invoices for that PO) do not exceed the PO amount.The reason why the PO and the invoice should be the same is for your own internal control - that is the whole purpose of a PO system.
Indeed, it looks like we would have to amend just about every PO. In the example given above, we would have to amend the €1000 PO to be a €900 PO, and raise a further PO for the remaining €100 that we expect to be billed next month. To me, this is a whole load of non-value-adding bureacracy that does not add any control.However, surely if a PO is raised, and the invoice is then for a different amount, you can amend the PO or set a credit against it or adjust it somehow. I would imagine that these changes would have to be approved and this therefore giving you your internal control.
The purpose of the PO is to ensure that orders to suppliers are authorised. In the example above, the supplier should not get the order to proceed with the €1000 order until the PO has been approved by the relevant Director.If the POs and the invoices will be different -what is the PO system doing for you??? Do you really need it??
. One of the vendors that we quite like is insisting that in ALL cases, the invoice must exactly equal the purchase order amount. The quoted reason for this is 'controls', but no-one can explain it any further.
Could there be any good reason why the invoice must exactly equal (as opposed to 'must not exceed') the purchase order?
Why would a negative difference (i.e. invoice amount less than PO amount) generate a query?If amounts differ ,ie either +/- it creates a query and results in duplicat/triplicate checking
Internal Controls - Purchasing and Payment
10. Any queries over prices are put on Hold in a credit file and a payment stop placed until credit query is resolved from supplier. Refer back to PO and agreed prices.
Why would a negative difference (i.e. invoice amount less than PO amount) generate a query?
Indeed - My point was that this is checked when that supplementary invoice arrives. There is no value (as far as I can see) in checking this when the first invoice arrives, once it does not exceed the PO value.A negative difference could suggest that there has been an undercharge .....This could result in a supplementary invoice later on .....maybe for an amount even greater than original PO
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