AP Invoicing - Invoice matching & Validation

Navigation path: Accounts payable/Purchase Orders/All Purchase orders

Accounts payable are liabilities due to a creditor when an organization orders goods or services without paying in cash up front (goods on credit). In the Accounts payable modules, the next logical process step after the purchase order has been created, confirmed and received is the invoicing process.

On the accounts payable side, Dynamics 365 for Finance and operations allows to set up vendor invoice matching policies as well as invoice validation tolerances. Invoice matching is the process of matching vendor invoice, purchase order, and product receipt information. In case there are discrepancies amongst those source documents, Dynamics 365 for Finance and Operations checks the specified and allowed tolerance thresholds and determines of the invoice matching validation passes or fails. For example, a user created a purchase order with one line item for 5,000 soccer balls at a price of 10.00 each. The purchase order is approved and submitted to the vendor. The vendor ships 5,000 soccer balls and the product receipt is processed at a price of 10.00 each. Lastly, the invoice arrives stating 5,000 soccer balls at a price of 12,00. In case the policy for net unit price tolerances is set to 3%, the invoice validation would fail as of the price discrepancy.

Dynamics 365 for Finance and operations allows the following invoice matching types:

• Two-way matching: This invoice matching type matches the price information on the invoice to the price information on the purchase order.

• Three-way matching: This invoice matching type matches the price information on the invoice to the price information on the purchase order. Also match the quantity information on the invoice to the quantity information on the product receipts that are selected for the invoice.

• Charges matching: This invoice matching type matches the charges information (amounts) on the invoice to the charges information (amounts) on the purchase order.

• Invoice totals matching: This invoice matching type matches the total amounts on the invoice to the total amounts on the purchase order.

Dynamics 365 for Finance and operations allows the following invoice matching validation types:

• Charges matching: This invoice matching validation types matches the charges information (amounts) on the invoice to the charges information (amounts) on the purchase order.

• Price totals for line item matching: This invoice matching validation types is typically used for organization that receive and process multiple invoices for a single purchase order line. A requirement to use this type is that two-way or three-way matching is enabled. This type matches price information for the net amount of each line on the invoice, and all pending and previously posted invoice lines, with the net amount of the corresponding purchase order line.

• Line level matching: This invoice matching validation types matches the unit price of the invoice to the unit price of the purchase order when two-way matching is enabled and additionally matches the invoice quantity to the matched product receipt quantity when three-way matching is enabled.

• Invoice totals matching: Lastly, this invoice matching validation types matches the total amounts on the invoice to the total amounts on the purchase order.

See below an invoice that passed invoice validation.

After the invoice passed the validation and is posted, the vendor payment journal is to be processed.