An invoice based on a contract (automatic approving)
If your organization uses both the Contract Management and Invoice Processing modules, Spend Cloud provides the ability to link invoices to contracts. This allows you to set up automatic approval for invoice lines based on the associated contract. In this article we will tell you more about how this works.
To use this functionality, it needs to be enabled in the configuration by a Visma | ProActive Consultant. If you wish to enable this at a later point, you can request it through our Support department.
Applying Contracts to Invoices
After adding an invoice and it appears in the "Coding" menu, you can determine the correct coding. When you select a creditor, the system will display a notification at the top of the screen if contracts are available.
When coding the invoice line, you can select the appropriate contract from the available contracts. The number of contracts displayed depends on the number of contracts created for this creditor.
In some cases, Spend Cloud will display a green bar when you select the contract, indicating that the invoice line will be automatically approved. In this case, the invoice line doesn't need to go through the authorization scheme, and the invoice can be exported to the financial package immediately after sending, depending on whether all lines within the invoice are automatically approved.
Conditions for Selecting a Contract for an Invoice
Whether a contract can be selected for an invoice depends on several conditions:
- Same Relation: The contract and the invoice must be booked under the same relationship. You cannot link an invoice to a contract that is associated with a different relationship.
- Same Administration: The invoice and the contract must be booked in the same administration. You cannot link an invoice to a contract that is not booked in the same administration.
- Contract Status and Tolerance Period: The contract must not be terminated, or if it is terminated, the end date must fall within the set tolerance period during which invoices can still be linked to terminated contracts. You can only link invoices to active contracts. Within the configuration settings of contract management, you can set how many days after the end date of a contract invoices can still be linked to it. This can be configured by a Spend Cloud administrator within your organization through the contract management configuration settings.For more information about the contract management configuration settings, you can read here.
Conditions for Automatic Approval Based on a Contract
Whether an invoice line is automatically approved based on a contract depends on several conditions:
- The contract must be configured to allow automatic approval of invoices.
- Costs must fall within the configured price deviation tolerance.
- The way costs are recorded in Spend Cloud for the contract should align with the moments when costs are billed (as specified in the contract period).
Make sure to thoroughly check these conditions if you're wondering why an invoice line can't be automatically approved based on the contract.
Exceeding Agreed Contract Costs
If the costs of an invoice fall outside the contract costs and the configured price deviation tolerance, the invoice cannot be automatically approved.
Spend Cloud checks both costs for a period and the total costs over the contract duration. Based on this, it determines whether the costs of the invoice do not exceed the contract costs for the specified period.
If the amount booked against the contract is higher than the contract costs, Spend Cloud will display a notification. In this case, invoice lines will not be automatically approved, and they must be reviewed by an authorized person. It is mandatory to enter an employee before you can send the invoice.
Spend Cloud keeps track of how many invoice lines are booked against the contract. If the total amount of the lines ultimately exceeds the total contract costs plus any price deviation tolerance, a notification will be displayed again. In this case, invoice lines will not be automatically approved, and you'll need to enter an employee.
Deducting a commitment on an invoice
This functionality allows your accounts payable department to manage invoices more efficiently and utilize automatic approval based on contracts. If your organization also uses the Commitment module, you can link invoices to commitments for further control and reporting. For more information on this, please refer to this article: Deducting Commitments.
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