Case 6: Quantity Within Tolerance, Unit Price Outside Negative Tolerance (Rejected)
Scenario:
The quantity is within tolerance, but the unit price is below the acceptable range (negative tolerance) and is not approved.
Action:
The system rejects the unit price, adjusts it to match the purchase order, and generates a credit note for the difference. Additional header charges may be applied as necessary.
Example:
Purchase Order (PO):
Quantity: 100 units
Unit Price: $10.00 per unit
Total Amount: $1,000.00
Invoice Received:
Quantity: 100 units (within tolerance of 0%)
Unit Price: $9.00 per unit (outside negative tolerance of -10%)
Total Amount: $900.00
Tolerance Levels:
Quantity Tolerance: ±2%
Unit Price Tolerance: ±1%
Since the quantity (100 units) is within the acceptable tolerance range but the unit price ($9.00) is below the acceptable tolerance and is not approved, the system will:
Reject the Unit Price: The system does not accept the invoiced unit price of $9.00.
Adjust the Unit Price: The system adjusts the unit price to match the original purchase order unit price.
Adjusted Unit Price = $10.00 (from PO)
Calculate the Corrected Total Amount: Using the adjusted unit price, the system recalculates the total amount.
Corrected Total Amount = Quantity × Adjusted Unit Price
Corrected Total Amount = 100 units × $10.00 per unit = $1,000.00
Generate a Credit Note: The system generates a credit note for the difference between the incorrect total amount on the invoice and the corrected total amount.
Credit Note Amount = Original Invoice Total - Corrected Total Amount
Credit Note Amount = $900.00 - $1,000.00 = -$100.00
The credit note will effectively reverse the undercharge.
Process the Invoice: The system processes the invoice with the adjusted total amount of $1,000.00 and applies the credit note for $100.00 to account for the undercharged unit price.
This approach ensures that the pricing aligns with the purchase order terms, even when an incorrect, lower price is invoiced.