Charge Per Unit Outside Tolerance (Rejected)
Scenario:
The charge per unit is outside tolerance and has not been approved.
Action:
The system adjusts the charge per unit to match the purchase order or approved levels, generating any necessary debit or credit notes.
Example:
Purchase Order (PO):
Charge Per Unit: $6.00
Quantity: 800 units
Total Charge Amount: $4,800.00
Invoice Received:
Charge Per Unit: $7.00 (outside tolerance of 16.67%, rejected)
Quantity: 800 units
Total Charge Amount: $5,600.00
Tolerance Levels:
Charge Per Unit Tolerance: ±5%
Since the charge per unit ($7.00) exceeds the acceptable tolerance range of 5% and has not been approved, the system will:
Reject the Invoiced Charge Per Unit: The system does not accept the invoiced charge per unit of $7.00 due to the variance exceeding the tolerance limit.
Adjust the Charge Per Unit: The system adjusts the charge per unit to match the purchase order or the approved charge per unit:
Adjusted Charge Per Unit = $6.00 (from PO)
Recalculate the Total Charge Amount: The system recalculates the total charge amount based on the adjusted charge per unit:
Corrected Total Charge Amount = Quantity × Adjusted Charge Per Unit
Corrected Total Charge Amount = 800 units × $6.00 = $4,800.00
Generate a Debit Note: Since the original invoice total was higher than the corrected total, the system generates a debit note for the overcharged amount:
Debit Note Amount = Original Invoice Total - Corrected Total Charge Amount
Debit Note Amount = $5,600.00 - $4,800.00 = $800.00
Process the Invoice: The system processes the invoice with the corrected total charge amount of $4,800.00 and issues a debit note for $800.00 to account for the overcharged amount.
This approach ensures that financial transactions are consistent with the purchase order terms, rejecting unapproved variances and maintaining accurate billing practices.