P2P-07

Control Description

SAP compares invoice prices against purchase order prices using Tolerance Key PP. If a price variance exceeds the configured threshold, the system automatically blocks the invoice from payment to prevent overbilling. Blocked invoices require manual review and management approval before release.

Risk

The company could pay a higher price than what was originally agreed upon and approved in the purchase order, leading to overpayment.

Implementation Details

## How the PP Tolerance Key Works

• In SAP S/4HANA, the PP tolerance key is used during Logistics Invoice Verification (transaction MIRO) to check for price variances between the expected value of an invoice item (calculated as the invoiced quantity multiplied by the purchase order price) and the actual value entered on the vendor invoice.

• When an incoming invoice is processed in MIRO, the system performs an automated price variance check for each line item using the PP tolerance key. The system determines the expected value by multiplying the Quantity Invoiced by the Order Price from the Purchase Order. It then compares this expected value against the gross/net amount billed on the vendor invoice item.

# How It Is Implemented
Configuring and activating the PP tolerance key is handled in Customizing on a company-code basis:

Configure Tolerance Limits (Transaction OMR6 or via SPRO)
• Materials Management > Logistics Invoice Verification > Invoice Block > Set Tolerance Limits

Locate the PP tolerance key (Price Variance). For your specific Company Code, define the lower and upper limits:
•Lower Limit % / Absolute Value:Set the allowable negative variance buffer.
• Upper Limit % / Absolute Value: Set the allowable positive variance buffer.

Test Procedures

A) Test of Design
1- Go to SPRO (IMG path):Materials Management > Logistics Invoice Verification > Invoice Block > Set Tolerance Limits. Select the PP tolerance key
2 - Verify that threshold in particular upper limit settings include check limits and the values are reasonable

B) Test of Operating Effectiveness:
1- Create a Purchase Order with a specific net price.
2- Navigate to MIRO and enter an incoming invoice referencing that PO, but alter the line-item price so it exceeds the upper limit configured for the PP key
3. Simulate or post the document. Observe that SAP flags the price discrepancy and automatically blocks the invoice for payment
4. Use transaction MRBR (Release Blocked Invoices) to manage, review, and release the invoice once the pricing discrepancy is resolved with the vendor.