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SAP Threeway Match Functionality & configuration

Scope of the Blog:

The purpose of the blog is to provide the overview of three way match Functionality & how SAP configuration can be utilized to achieve three way match functionality. SAP Three way match is one of the most common Purchase to Pay Business Process for Direct Materials (Stock Items) which exists across all industries.

SAP Three-way match overview:

  • The Quantity & Price is matched between PO, GR & IR. (Three Levels)
  • SAP Three way match is based on PO Line item (If a PO has multiple line items, Three way match is achieved in each line items)
  • Buyer of the Purchase order ensures three way match in SAP & Buyer resolves the discrepancy by correcting PO,GR or IR.
  • SAP Provides configuration & Reports (MRBR Report) to achieve three way match Functionality during Business transactions.

Configuration for Three-way Match

The Configuration for Three way match is done in the Following path is done in the following path.

SPRO-> Materials Management-> Logistics Invoice Verification-> Invoice Block-> Set Tolerance Limits

Configuration for Quantity Variance (Q):

Tolerance Key DW: 

Tolerance Key DW blocks the Invoice when there is no corresponding GR for a line item of a PO.

It prevents the invoice to be paid immediately to vendor.

Example:

PO Qty -100

Vendor Provides Invoice first for 100 Qty . 

GR is Posted after few days of invoice Posting

Result:

As soon as the invoice is posted in the system the invoice gets blocked due to DW tolerance key & doesn’t allow the system to pay the invoice immediately. The Blocked invoice appears in MRBR report & Buyer of the Purchase order takes the suitable Decision to ensure three way match.

DW.jpg

Tolerance Key DQ  : 

Tolerance Key DQ Blocks invoice when there is Quantity discrepancy

Example:

DQ tolerance Config-5%

PO Qty-100

GR Qty-100

Invoice Qty-150

Result:

Since the invoice quantity is higher than the PO quantity the invoice gets blocked due to DQ tolerance Key. The Blocked invoice appears in MRBR report & Buyer corrects the discrepancy by taking suitable organisational decisions.

DQ .jpg

          Configuration for Price Variance (P)

Tolerance Key PP: 

Tolerance Key PP   compares the  price between purchase order & invoice with the Tolerance limit specified in the configuration.

Example:

PP tolerance in Config-200 $

PO Price -1000$ Qty-1

GR-Qty1

Invoice Price- 1400 $

Result:

Invoice is blocked since the Invoice price is higher than the PO price (More than Tolerance Specified.) The blocked invoice appears in MRBR report & Buyer corrects the discrepancy by taking suitable decisions.

Price Variance .jpg

Configuration for Order Price Quantity (OPQ)

SAP provides two Tolerance Keys Tolerance Key BR (IR before GR) & Tolerance Key BW (GR before IR)   to address the order price quantity scenarios.

Tolerance Key BR (IR before GR)

Invoice gets blocked if the Order Price Quantity variation is more than the value specified in configuration.

The system compares the ratio between quantities invoiced in order price quantity units: quantity invoiced in order units Vs quantity ordered in order price quantity units: quantity ordered in order units

BR .jpg

MRBR  (Program RM08RELEASE)Report

This report is run by Buyer of the Purchase order (Purchasing group wise) to verify the list of invoices blocked due to Quantity & Price variance for a given company code. 

MRBR.jpg

This program doesnot remove the block if the discrepancy is not resolved.The best practice is to run this report in background by company code so that the program removes the block automatically after the corrective action taken by Buyer.

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      23 Comments
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      Author's profile photo Former Member
      Former Member

      Good one!!

      Author's profile photo Carlos Wagner Moçatto
      Carlos Wagner Moçatto

      Excellent post

      Author's profile photo Former Member
      Former Member

      Very good Post Madhavan.

      A very quick question, Is there a reference document which relates the Invoice Vs Confirmation? In a scenario where more than one confirmation and more than one Invoice are received per line item, Is there a way to relate the Invoice for confirmation or set of confirmations.

      Anitha

      Author's profile photo Former Member
      Former Member

      Its Good

      Avinash

      Author's profile photo Former Member
      Former Member

      Good Post

      Javier Torres

      Author's profile photo Former Member
      Former Member

      Good one for quick ref..!!

      Author's profile photo Former Member
      Former Member

      One of the best document ... clears the concept...

      🙂

      Author's profile photo Cecil D'Souza
      Cecil D'Souza

      Perfectly explained and presented. Thank you for your effort.

      Author's profile photo Sameer Nirgude
      Sameer Nirgude

      Nice compilation.

      Suggest you to review for addition of Quality block too.

      Since MRBR can be used for releasing the blocked invoices (manually), the access is normally not provided to Buyers. They instead can review the MRBR reports for decision making.

      Author's profile photo Former Member
      Former Member

      Nice post which has cleared many doubts. It would be better to understand BR and BW tolerance keys, if it would have been provided with example for these keys.

      Author's profile photo Former Member
      Former Member

      Really helpful .. 🙂

      Author's profile photo Former Member
      Former Member

      Hello Madhavan,

      If we like to enforce 3-way match for the direct purchases but not for indirect purchases how can we do it ? We can differentiate direct from indirect either based on P-org or PO doc type.

      Author's profile photo Preeti Kashyap
      Preeti Kashyap

      Good One. Looks like ready made and easily available for quick future reference.

      Thanks 🙂

      Author's profile photo Former Member
      Former Member

      Really very nice........

      Author's profile photo bhawna sajwani
      bhawna sajwani

      A good read for GR/IR issue ...helpful for FI people too.

      This will help us in f.13/f.19 issues 😉

      Author's profile photo Former Member
      Former Member

      Nice Article. Thanks sharing the same with crisp detail 🙂

      Author's profile photo Nishu Shah
      Nishu Shah

      Neatly explained

      Thank You

      Nishu

      Author's profile photo Former Member
      Former Member

      One Question on Qty variance block...lets say i have short receipt and invoice is came with full Qty and that way invoice will be blocked....but how it is handled as no shortage receipt is expected...how do i pay to vendor only for received quantities not the invoiced qty ?

      has anyone idea on this ?

      Author's profile photo Former Member
      Former Member

      Excelent post!

      Does anybody know a report that shows the hole three-way-match configuration??

      thx

      Author's profile photo Nitin U Kaple
      Nitin U Kaple

      Very good document

      Thanks

      Author's profile photo Former Member
      Former Member

      Nice docuemnt but doesnot explain whether 3 way match includes tax on Invoice or not

      Author's profile photo Former Member
      Former Member

      Very nice explanation.

      But will this settings work in case if supplier supplies more than requested quantity of materials and extra materials are being received to stock for free?

      It is kind of contradiction, inst it?

      Author's profile photo Former Member
      Former Member

      Really helpful... keep up the good work... keep sharing/ teaching