Both the quantity and unit price are outside tolerance, and neither has been approved.
The system rejects the invoice data, adjusts the values to match the purchase order, and generates necessary debit or credit notes.
Purchase Order (PO):
Quantity: 150 units
Unit Price: $30.00 per unit
Total Amount: $4,500.00
Invoice Received:
Quantity: 140 units (outside tolerance of -6.67%, rejected)
Unit Price: $33.00 per unit (outside tolerance of 10%, rejected)
Total Amount: $4,620.00
Tolerance Levels:
Quantity Tolerance: ±5%
Unit Price Tolerance: ±2%
Since both the quantity (140 units) and unit price ($33.00) are outside the acceptable tolerance limits and neither has been approved, the system will:
Reject the Invoice Data: The system does not accept the invoiced quantity or unit price due to their deviation from the tolerance limits.
Adjust the Quantity: The system adjusts the quantity to match the original purchase order quantity.
Adjusted Quantity = 150 units (from PO)
Adjust the Unit Price: The system adjusts the unit price to match the original purchase order unit price.
Adjusted Unit Price = $30.00 per unit (from PO)
Recalculate the Total Amount: The system recalculates the total amount using the adjusted quantity and unit price:
Corrected Total Amount = Adjusted Quantity × Adjusted Unit Price
Corrected Total Amount = 150 units × $30.00 per unit = $4,500.00
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 Amount
Debit Note Amount = $4,620.00 - $4,500.00 = $120.00
Process the Invoice: The system processes the invoice with the corrected total amount of $4,500.00 and issues a debit note for $120.00 to offset the overcharged amount.
This approach ensures that the financial transaction is corrected to match the purchase order terms, maintaining accurate and fair billing practices.