Invoice Tolerance Keys An insight Part 1

April 18, 2014 | 7,112 Views |

Raja Ramasamy
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MM (Materials Management)
3way matchinvoice blockinvoice verification;rbkp blockedspgrpthree way matchtolerance limit

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In this blog I am going to share the invoice tolerance limits learning and understanding which
would help to understand invoice blocking techniques and provide a base to apply in real
time situations depending on the clients need.
This document will help consultant who is going to implement Open Text Vendor Invoice
Management (VIM)

Please refer Part-2 for remaining tolerance keys

Introduction:
In the Procure to Pay(P2P) life cycle procurement part ends when Account Payable(AP)
processor/Invoice clerk posts the vendor invoice in SAP using MIRO transaction which is
also called Logistics Invoice Verification(LIV). It is tedious job for invoice clerk manually to
verify each and every invoice line item is conforming to agreed price or quantity in PO. SAP
provides systemic way of verifying this kind of discrepancies and block the invoice for
payment using the 2 digit key called Tolerance key.
Lower & upper tolerance limits for all possible discrepancies can be maintained in tolerance
key. I would try to explain all the invoice tolerance keys in this blog with possible examples.
There are 2 kinds of invoice matching in SAP which are controlled by tolerance keys.

o 3 way match:

Invoice line item is checked against corresponding purchase order and good
receipt documents item for price & quantity matching
 o 2 way match:

Invoice is checked against only to PO price/qty if there is no goods receipt

planned

Let us understand the how the automatic block is working via tolerance keys. In SAP we have
many tolerance keys, I am going to discuss only below keys in this part
AN,AP,BD,BR,BW,DQ,DW.
Tolerance Limits:

SAP tolerance limits work only for MIRO transaction

Invoice posted in FB60 is not subject to tolerance

keys limit check

Tax amount is not included during tolerance check

It is stored in table T169G

Invoice blocking ways:

In SAP vendor invoice can be blocked for payment by anyone of the following way.

1. Automatic block:

Only if there is a discrepancy due to price or quantity or date variance in an invoice.

If the item amount is exceeded from the limit maintained in the tolerance key.
2.Manual block:
Invoice processor could manually block an invoice either at item level or header level
3.Blocking through payment term:
Invoice can be blocked always with a particular payment term even if there is no variance
4.Stochastic blocking:
Random blocking of invoices without any variance
5.Blocking at vendor master level:
Invoice can be blocked always for a particular vendor if specific blocking key is maintained
at vendor master level
Blocking indicators:
Blocking indicators are available both at header and item level of invoice document.
System set this indicator in the document wherever and whenever it is appropriate.
Header level:
Table: RBKP_BLOCKED Field: MRM_ZLSPR
Possible values:
A Automatically blocked due to existence of blocking reasons
S Stochastically blocked
M Manual payment block set in header no blocking reasons
W Automatically blocked due to entry via Web Invoice
Item level:
Table: RSEG Value = X
Fields:
SPGRP Blocking reason price
SPGRM Blocking reason quantity
SPGRT Blocking reason date
SPGRG Blocking reason OPQ
SPGRV Blocking reason Project
SPGRQ Manual blocking reason
SPGRS Blocking reason amount
SPGRC Blocking reason: Quality

1.AN Amount for an item without order reference

Definition:
System checks every line item in an invoice with no order reference against the absolute
upper limit defined.
Without order reference means direct posting to G/L or Material.
System behavior:
If only the invoice line item is greater than absolute upper limit the invoice would be blocked.
Let us understand with below example.
It updates RBKP table without a header Block R. But updates table RBKP_BLOCKED
with payment block A.
No entries in RSEG table as it is directly posted to G/L or Material
Tolerance Key RBKP RBKP_BLOCKED RSEG A
AN No blocking indicator A- Auto block No update N
update(ZLSPR) (item amount block)

2.AP Amount for an item with order reference

Definition:
System checks every line item in an invoice with order reference against the absolute upper
limit defined.
Pre-requisite:

Item amount check must be activated at company code level OMRH

Item amount check must allowed for item category and GR indicator OMRI

System behavior:
Let us understand with below example
No blocking indicator at header table RBKP but RBKP_BLOCKED table has blocking
indicator A.
Blocking indicator RSEG- SPGRS (Blocking reason item amount) is set at item level.
Item amount block must be released manually. There is no automatic release possible even if
we perform any one of the following activities

Post subsequent credit

Adjust AP tolerance limit

Tolerance Key RBKP RBKP_BLOCKED RSEG A

AP No blocking indicator A-Auto block RSEG- SPGRS = N
update(ZLSPR) X
(item amount
block)
3.BD Form small differences automatically
Definition:
The system checks the balance of the invoice against the absolute upper limit defined. If the
upper limit is not exceeded, the system automatically creates a posting line called
Expense/Income from Small Differences, making the balance zero and allowing the system to
post the document
System behavior:
Let us understand with below example
Small difference within tolerance limit:
As per the PO reference the invoice amount is 1000 USD.
But vendor actual invoice copy has amount of 1002 USD.
AP invoice processor enters the invoice amount as per the vendors invoice copy which is 2
USD higher than PO price.
Since small difference is within the tolerance limit, invoice would be posted without block.
Small difference amount would be debited to small difference G/L account maintained for the
transaction event key DIF in OBYC.
Same rule is applied in the lower side as well
Small difference above the tolerance limit:
PO price: 1000 USD
Vendor invoice amount: 1003 USD
If the small difference above the tolerance limit then system would not allow to post the
invoice with hard error Balance is not zero. Still AP invoice processor could able to post
invoice via menu bar option Edit -> Accept and Post provided if he/she has authorization
object M_RECH_AKZ allowed.

If we post with above option then system would behave as below.

o Invoice will be posted without block

o Small difference G/L account (DIF) get posted

o RBKP MAKZN (net amount accepted manually) field will get updated with small
diff. amount : 3.00

Tolerance Key Tolerance RBKP RBKP_BLOCKED RSEG

BD Within range No blocking No update No blocking

indicator reason upda
update(ZLSPR)
BD Above No blocking No update No blocking
indicator reason upda
update(ZLSPR)
MAKZN field
updated with diff.
amount

4.BR: Percentage OPUn variance (IR before GR)

Definition:
The system calculates the percentage variance using below formula and compares the
variance with the upper and lower percentage tolerance limits.

Pre-requisite to simulate this scenario:

1. No GR based IV

2. Variable order unit is activated at material level

3. Maintain tolerance key DW with Do not check active

Tolerance:

Material master:

CRT is maintained as order unit

EA is maintained as order price unit in info record 1 EA = 100 USD
PO Details:
PO has been created with CRT as Order unit and EA as Order price unit
Po quantity: 2 CRT = 24 EA
Invoice details:
Invoice is simulated before GR as below
Scenario 1:
Order unit quantity 2 CRT
Order price unit quantity 22 EA and amount 2200 USD
Observation: There is no warning message on the variance.
Let us use the above formula to find the variance percentage.

Difference is 100 91.6 = 8.9 % which is within the BR tolerance limit 10% maintained
Scenario 2:
Order unit quantity 2 CRT
Order price unit quantity 21 EA and amount 2100 USD

Observation: There is a warning message as below.

Let us use the above formula to find the variance percentage.

Difference is 100 87.5 = 12.5 % which is more than the BR tolerance lower limit 10%.
Hence we are seeing the above warning message which will block the invoice for payment.
Tolerance Key RBKP RBKP_BLOCKED RSEG A
BR No blocking indicator A- Auto block RSEG- SPGRS = N
update(ZLSPR) X
(item amount
block)
5.BW: Percentage OPUn variance (GR before IR)
Definition:
The system calculates the percentage variance using below formula and compares the
variance with the upper and lower percentage tolerance limits.

Let us understand with same master data

PO Details:
PO quantity in order unit 2 CRT
Po quantity in order price unit 24 EA
GR Details:
GR quantity in order unit 2 CRT
GR quantity in order price unit 22 EA

IR Details:
Scenario 1:
IR quantity in order unit 2 CRT
IR quantity in order price unit 20 EA
Observation: There is no warning message on the variance.
Variance % = (20/2) / (22/2) *100
= 90.9%
Difference is 100 90.9 = 9.1 % which is within the BR tolerance limit 10% maintained
Scenario 2:
IR quantity in order unit 2 CRT
IR quantity in order price unit 19 EA
Observation: There is a warning message as below

Variance % = (19/2) / (22/2) *100

= 86.4%
Difference is 100 86.4 = 13.6 % which is more than the BR tolerance limit 10% and invoice
posted with payment block.
Tolerance Key RBKP RBKP_BLOCKED RSEG A
BR No blocking indicator A- Auto block RSEG- SPGRS = N
update(ZLSPR) X
(item amount
block)

6.DQ: Exceed amount: quantity variance

This tolerance key has both absolute and percentage limits.
Definition:
If a goods receipt has been defined for an order item and a goods receipt has already been
posted, the system multiplies the net order price by (quantity invoiced (total quantity
delivered total quantity invoiced)).
If no goods receipt has been defined, the system multiplies the net order price by (quantity
invoiced (quantity ordered total quantity invoiced)).
System behavior:
Absolute limits:
Let us see the system behavior if only absolute values are maintained and percentage limits
are marked as Do not check.
Upper limit: 100.00 Lower limit: 100.00
Test data :- (GR has been defined)
PO quantity = 100 EA
PO price = 100 USD
GR quantity = 50 EA
a) System behavior when invoice quantity is 51
Variance = PO price x (quantity invoiced (total quantity delivered total quantity
invoiced))
= 100 * (51 (50-0))
= 100 * (1)
= 100
Variance 100 is equal to upper limit 100 and there will not be any warning message.

b) System behavior when invoice quantity is 52

Variance = PO price x (quantity invoiced (total quantity delivered total quantity
invoiced))
= 100 * (52 (50-0))
= 100 * (2)
= 200
Variance 200 is more than upper limit 100 and there will be a warning message as below.

When we post invoice with above variance it will get blocked for payment.
It updates tables as below
Tolerance Key RBKP RBKP_BLOCKED RSEG A
DQ No blocking indicator A- Auto block RSEG- SPGRM = X Y
update (ZLSPR) (Quantity block )
Automatic release possible if the blocking reason RSEG- SPGRM is deleted when we post
GRN for the balance quantity or credit memo for the excess invoiced quantity.
Same rules apply on the lower side as well
Test data :- (GR has not been defined)
PO quantity = 100 EA
PO price = 100 USD
GR not possible
a)System behavior when invoice quantity is 51
Variance = PO price x (quantity invoiced (total quantity ordered total quantity
invoiced))
= 100 * (51 (50-0))
= 100 * (1)
= 100
Variance 100 is equal to upper limit 100 and there will not be any warning message.

b)System behavior when invoice quantity is 52

Variance = PO price x (quantity invoiced (total quantity ordered total quantity
invoiced))
= 100 * (52 (50-0))
= 100 * (2)
= 200
Variance 200 is more than upper limit 100 and there will be a warning message as below.
Invoice will be blocked for payment and same tables will be updated as above.
Percentage limits:
We can also configure percentage limits for the quantity variance check. In this case, the
system calculates the percentage variance from the expected quantity, irrespective of the
order price, and compares the outcome with the percentage limits configured.
Let us see the system behavior with same example if only percentage limits are maintained
and absolute values are marked as Do not check.
Upper % limit: 10.00 Lower % limit: 10.00
Test data :- (GR has been defined)
PO quantity = 100 EA
PO price = 100 USD
GR quantity = 50 EA
a)System behavior when invoice quantity is 55
Variance = (quantity invoiced total quantity delivered)/ (quantity expected)*100 %
= (55-50)/50 * 100 %
= (5/50)*100 %
= 10 %
Variance 10% is equal to upper limit 10 % and there will not be any warning message.
b)System behavior when invoice quantity is 56
Variance = (quantity invoiced total quantity delivered)/ (quantity expected)*100 %
= (56-50)/50 * 100 %
= (6/50)*100 %
= 12 %
Variance 12% is more than upper limit 10% and there will be a warning message as below.
Invoice will be blocked for payment and same tables will be updated as above.

Both Variances active:

If both absolute & percentage variance are active the system would block which ever
tolerance is first breached.
Quantity check for Delivery cost:
The system also carries out a quantity variance check for planned delivery costs when we
post only planned delivery cost.
Tolerance key not maintained:
If the tolerance key DQ is not maintained for a company code when we perform the same
transactions discussed earlier, system considers this as zero tolerance and block the invoice
for the payment for any deviation.
7.DW: Quantity variance when GR quantity = zero
Definition:
If a goods receipt is defined for an order item but none has as yet been posted, the system
multiplies the net order price by (quantity invoiced + total quantity invoiced so far).
The system then compares the outcome with the absolute upper tolerance limit defined.
System behavior:
This tolerance key works only for PO based invoice verification because GR based invoice
verification will not allow IR without GR.
DW absolute upper limit as 100:
PO quantity = 100 EA
PO price = 10 USD
No GRN posted
a)If the IR quantity is 10 then system calculates variance as below
Variance = Net order price * (quantity invoiced + total quantity invoiced so far)
= 10 *(10+0) = 100
This value is equal to DW limit hence there is no warning message and system will not
block the invoice.

b)If the IR quantity is 11 then system calculates variance as below and block the invoice.
Variance = 10 *(11+0) = 110

This value is more than DW tolerance absolute upper limit hence invoice got blocked.
It updates tables as below
Tolerance Key RBKP RBKP_BLOCKED RSEG A
DW No blocking indicator update A- Auto block RSEG- SPGRM = X Y
(ZLSPR) (Quantity block )
Automatic release possible if the blocking reason RSEG- SPGRM is deleted when we post
GRN for the balance quantity or credit memo for the excess invoiced quantity
DW absolute upper limit as Do not check:
PO quantity = 100 EA
PO price = 10 USD
No GRN posted
If the IR quantity is 112 then also system would not block even though this is beyond
the DQ tolerance since it has been maintained as Do not check and there is no GR has been
done.
One should be very careful to use this option as this would by-pass quantity variance DQ
block if there is no GR posted where GR has been planned
DW tolerance key is not maintained:
If this key is not maintained for a company code it would always blocks the invoice for PO
based invoice verification when there is no GR has been posted.
The Procedure for calculating MAP is :-

Case 1 :- PO at different price

If in Material Master your MAP is 0.8GBP & closing stock of 30Nos, value is 24GBP

In PO if the price is 0.9GBP & qty is 10nos, then after Goods Receipt Total Value of the GR i.e.
Qty * Price + any other delivery cost will be added to the material stock value. Qty is also
updated. New Total Value / New Stock Qty will be MAP.

In this case Qty received 10 & price is 0.9 that means value would be 9GBP.

Total Value becomes 24GBP (Present Stock) + 9GBP (Goods Receipt) = 33GBP

Total Qty becomes 30Nos + 10Nos (Goods Receipt) = 40Nos

MAP becomes = 33GBP / 44Nos = 0.75

Case 2 : Invoice Posting (MIRO) at different price than PO

While doing MIRO is we post at different price system will check whether sufficient stock posted
in GR is available. In the above case it is 10Nos,

If it is there, then the above logic as in case 1 will take place

If not available, to the extent of stock availability system will post the different value & adjust MAP
& remaining is posted to Price Difference Account.

In your case it would be like this :

1. MAP 0.8 for 30Nos (Value would be 24GBP)

2. Invoice Posting 1.74GBP for 1No. That means value would be 24GBP + 1.74GBP = 25.74GBP

Qty would be 30+1 = 40

MAP = 25.74 / 40 = 0.64GBP

Hope this clarifies your doubt

 st
sap mm valuation scenario
1
case:-
Material with Price indicator S (Standard price) in accounting view of Material master record

Purchase order
with quantity 10

Price of RS 10/pc

Once the purchase order is saved, GR is done based on the Purchase order. Stock is maintained
for the particular material.

Material master record price maintained is Rs 10/pc

Stock Quantity: 10 In case in Material Master record,price maintained

is RS 9/pc

Accounting entry during GR, Accounting entry during GR

Debit stock a/c : +10 Debit stock a/c : +9

Credit GR/IR a/c : -10 Credit GR/IR a/c : -10

Total : 0 Total : 1(Price difference

account )
Let s assume the invoice from the vendor was received after1 month and within the time we
have completely consumed the material and thestock quantity for the particular material is zero.
The invoice what we got from vendor had a discount and there was a price
difference in it.

Accounting entry for Stock quantity zero during Invoice verification,

Stock Quantity: 0
Credit Vendor account : -8

Debit GR/IR a/c : +10

Total : -2 (Pricedifference account)

2nd
case Material with Price indicator S (Standard price) in accounting view of Material master
record

Purchase order
with quantity 10

Price of RS 10/pc

GR stock : 10

Invoice verification has been done based on the purchase order with some discount on the
purchase order quantity, which results in price difference in the invoice.
Accounting entry for stock quantity 10 during invoice verification,
Stock Quantity: 10

Credit Vendor account : -8

Debit GR/IR a/c : +10

Total : -2 (Pricedifference account)

3rd
case:- Material with Price indicator V (Moving average price) in accountingview of Material
master record

Purchase order
with quantity 10

Price of RS 10/pc

Once the purchase order is saved, GR is done based on the Purchase order. Stock is maintained
for the particular material

. Material master record price maintained is Rs10/pc

Stock Quantity: 10 Incase in Material Master record, price maintained
is RS 9/pc

Accounting entry during GR, Accounting entryduring GR

Debit stock a/c : +10 Debitstock a/c : +10

Credit GR/IR a/c : -10 CreditGR/IR a/c : -10

Total : 0 Total : 0

Note: Moving average price in Materialmaster record is always updated based on

Purchase order price.
Lets assume the invoice from the vendor was received after1 month and within the time we have
completely consumed the material and thestock quantity for the particular material is zero. The
invoice what we got from vendor had a discount and there was a price difference in it.
Accounting entry for Stock quantity zero during Invoice verification
Stock Quantity: 0

Credit Vendor account : -8

Debit GR/IR a/c : +10

Total : -2 (Pricedifference account)

4th
case:- Material with Price indicator V (Moving average price) in accounting view of Material
master record

Purchase order
with quantity 10

Price of RS 10/pc

GR stock : 10

Incase Invoice verification has been done with some discount on the purchase order,

The accounting entry would be,

Stock Quantity: 10

Credit Vendor account : -8

Debit GR/IR a/c : +10

Total : -2 (StockAccount)

5th
case:- Material with Price indicator V (Moving average price) maintained in material master
record

Purchase order
with quantity 10

Price of RS 10/pc

GR Stock : 10

Lets consider a case, in which 5 pcs have been consumed,

Stock Quantity: 5

Invoice verification has been done with some discount on the purchase order,

The accounting entry would be,

Credit Vendor account : -8

Debit GR/IR a/c : +10

Credit stock account : -1 (Stock Account)

Credit Price difference account : -1 (Price difference account)

Note:- In case of Standard Price the accountingentry will hit only on price difference
account.it will not have any effect on stock account.