Supplier Invoices & 3-Way Matching

The Supplier Invoices module verifies external vendor bills against purchase orders and warehouse dock receipts (GRN) before posting financial liabilities to Accounts Payable.

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3-Way Matching Logic & Variance Decomposition

To ensure financial integrity, prevent duplicate billing, and isolate currency fluctuations from commercial price changes, the system performs a continuous 3-Way Match:

flowchart TD
    PO[1. Purchase Order<br/>Agreed Cost & PO Rate] --- GRN[2. Goods Receipt Note<br/>Physical Qty Received]
    GRN --- INV[3. Supplier Invoice<br/>Billed Cost & Invoice Rate]
    PO --- INV
    INV --> Calc[Decompose Line Variances]
    Calc --> Post[Post Multi-Leg GL Journal Entry]

1. Multi-Currency Variance Decomposition

When matching an AP invoice against goods receipts, the system calculates two distinct variance components:

Receipt Base Cost = Quantity Billed * Receipt Unit Cost (GRN)
Foreign Cost = Receipt Base Cost / PO Exchange Rate
Trade Price Variance (PPV Base) = Invoice Base Amount - (Foreign Cost * Invoice Exchange Rate)
FX Rate Variance = (Foreign Cost * Invoice Exchange Rate) - Receipt Base Cost

• Trade Price Variance (Purchase Price Variance / PPV): Measures commercial price differences negotiated vs billed in constant currency.
• FX Rate Variance: Isolates currency exchange movement between the date the purchase order was placed and the date the supplier invoice was received.

2. General Ledger Automated Postings

Posting a matched supplier invoice creates a multi-leg journal entry that clears the temporary goods receipt accrual and establishes the Accounts Payable liability:

Debit:  Goods Received Not Invoiced (GRNI)  (Receipt Base Cost - Clears goods receipt accrual)
Debit/Credit: Purchase Price Variance (PPV) (Trade price variance)
Debit/Credit: Foreign Exchange (FX) Variance(Currency exchange variance)
Debit:  Input Tax / GST Recoverable         (Tax Amount Base)
Credit: Accounts Payable Control Account    (Total Invoice Amount Base)

• Unmatched Expense Invoices: If an invoice line is not linked to a Purchase Order (e.g. utility bills, freight fees), the operator must explicitly assign an active GL Expense Account, Cost Center, and Activity before posting.

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Step-by-Step Workflows

1. Recording and Matching a Supplier Bill

1. Go to Purchasing → Supplier Invoices (/supplier-invoices).
2. Click New Supplier Invoice.
3. Select the Supplier and linked Purchase Order.
4. Enter the vendor’s official Supplier Invoice Number and Bill Date.
5. The system automatically loads associated unbilled Goods Receipt Notes (GRN).
6. Verify billed quantities, unit prices, and tax categories against the vendor’s physical/PDF bill.
7. Click Post Invoice to record the payable liability in Accounts Payable, clear GRNI accruals, and update the General Ledger.

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Field Reference

Field	Description
Supplier Bill Number	Official vendor invoice reference (e.g. INV-98214).
Vendor	Payee vendor account credited in Accounts Payable.
Purchase Order	Parent procurement order matched to this bill.
Bill Date	Effective transaction date for fiscal period posting.
Due Date	Payment deadline computed from vendor trading terms.
Subtotal	Net invoice amount before tax in vendor currency.
Input Tax	GST / VAT recoverable on business purchases.
Total Amount	Gross payable liability in vendor currency.
Exchange Rate	FX spot rate used to translate invoice totals to base currency (EUR).