panaversity UNIVERSAL RULES (apply to every reconciliation task)
- NEVER approve an invoice that has not been matched against a PO (above the configured materiality threshold)
- NEVER process a duplicate invoice -- always check against prior submissions before authorising payment
- ALWAYS include specific recommended actions with deadlines in every output -- observations without actions are not acceptable
THREE-WAY MATCH ENFORCEMENT
Three-way match requires: Document 1: Invoice (from vendor) Document 2: Purchase Order (from ERP) Document 3: Goods Receipt / Service Confirmation (from operations)
TWO-WAY MATCH (acceptable only for):
- Services (no goods receipt exists)
- Utilities (no PO in advance)
- Invoices below configured materiality threshold
NEVER approve a direct materials invoice without goods receipt confirmation.
MANDATORY OUTPUT HEADER
TASK: [e.g. Invoice Reconciliation -- INV-2024-0847]
VENDOR TIER: [Strategic / Tactical / Commodity / Bottleneck / Unclassified]
CONFIGURATION: [Loaded: supply-chain.local.md / Not configured]
DATA SOURCES: [ERP / AP system / Manual input]
RECONCILIATION WORKFLOW -- FOUR-STAGE PROCESS
Stage 1: Document Intelligence
Extract structured data from invoice (PDF, email, EDI, manual entry):
MANDATORY FIELDS TO EXTRACT: Vendor name: [Exact legal name -- match against vendor master] Vendor ID: [Cross-reference ERP vendor master] Invoice number: [For duplicate detection] Invoice date: [Check against late submission rules] PO reference: [Required for matching -- flag if absent] Line items: [Description / quantity / unit / unit price / line total] Total amount: [Verify arithmetic: sum of lines + tax = total] Payment terms: [Match against contracted terms] Bank details: [Flag if different from vendor master -- fraud risk]
VALIDATION CHECKS AT EXTRACTION: Arithmetic check: do line items sum to invoice total? Vendor name match: does invoice name match ERP vendor master? Duplicate check: has this invoice number been submitted before? Late submission: is invoice date within the configured day limit? Bank detail change: are bank details the same as vendor master?
FLAG IMMEDIATELY IF: RED Bank details differ from vendor master -> FRAUD ALERT -- do not process; contact vendor by phone (not email) to verify; escalate to Finance Director RED Duplicate invoice number -> REJECT; notify vendor RED Invoice > configured days old -> REJECT; notify vendor of late submission policy RED Vendor not in approved vendor list -> HOLD; escalate to Procurement
Stage 2: Three-Way Match
MATCH EACH LINE ITEM AGAINST: Document A: Invoice line (what vendor claims to be owed) Document B: Purchase Order line (what was authorised to buy) Document C: Goods Receipt / Service Confirmation (what was actually received)
QUERY ERP via MCP:
- Find PO by reference number
- Retrieve all PO line items with authorised quantities and prices
- Find Goods Receipt(s) matched to this PO
- Retrieve confirmed received quantities from GR
MATCH CLASSIFICATION PER LINE ITEM:
MATCHED -- all within tolerance Invoice qty = GR qty (within tolerance) Invoice price = PO price (within tolerance) -> Auto-approve this line
PRICE VARIANCE -- OUTSIDE TOLERANCE Invoice price != PO price, outside tolerance -> Route to Procurement; require vendor price justification
PRICE VARIANCE -- WITHIN TOLERANCE Invoice price != PO price, but within configured tolerance -> Auto-approve with flag to Finance (audit trail)
QUANTITY VARIANCE -- OVER-INVOICED Invoice quantity > GR confirmed quantity -> Hold over-invoiced portion; investigate with warehouse/vendor
QUANTITY VARIANCE -- GOODS RECEIPT PENDING Invoice quantity matches PO but GR not yet received/confirmed -> Hold invoice; alert warehouse for GR confirmation; set 5-day follow-up reminder
PO NOT FOUND Invoice references a PO that does not exist in ERP -> Hold entire invoice; route to Procurement for retrospective PO or rejection decision
DUPLICATE DETECTED Same vendor, same amount, within configured days of prior invoice -> Reject; notify vendor; log as potential fraud attempt if persistent
UNAUTHORISED CHARGE Line item has no corresponding PO line -> Reject this line; notify vendor; request credit note
Stage 3: Exception Routing
FOR EACH EXCEPTION TYPE, APPLY ROUTING RULES:
Price variance -- within tolerance: Action: Auto-approve with Finance notification Log: Exception register (for pattern monitoring) Owner: Finance (automated)
Price variance -- outside tolerance (< escalation threshold): Action: Route to category manager for approval Deadline: 3 business days Owner: Category manager + Procurement
Price variance -- outside tolerance (> escalation threshold): Action: Route to CPO for approval Deadline: 5 business days Owner: CPO
Quantity variance -- over-invoiced: Action: Hold excess; investigate with warehouse team Deadline: 5 business days to confirm GR or reject Owner: Warehouse + Finance
GR pending: Action: Hold invoice; alert warehouse; 5-day auto-reminder If unresolved at 10 days: escalate to Operations Manager Owner: Warehouse -> Finance on resolution
PO not found (> materiality threshold): Action: Route to Procurement for retrospective PO or rejection Deadline: 3 business days Owner: Procurement
Duplicate invoice: Action: Reject immediately; notify vendor; log incident Owner: Finance (automated)
Fraud alert (bank details changed): Action: STOP all processing; escalate to Finance Director immediately Owner: Finance Director
Stage 4: Audit and Pattern Monitoring
LOG FOR EVERY INVOICE:
- Invoice number, vendor, date, amount
- Match outcome: APPROVED / EXCEPTION TYPE / REJECTED
- Exception resolution: action taken, approver, date resolved
- Payment amount approved vs. original invoice amount
PATTERN DETECTION (run weekly): Same exception from same vendor > 3x in 30 days: -> Flag as systematic issue; recommend vendor data alignment meeting
Price variance on same line item > 2 consecutive invoices: -> Flag as contract non-compliance; initiate commercial review
GR pending rate > 15% of invoices from one vendor: -> Flag as goods receipt process issue (warehouse or vendor despatch?)
RECONCILIATION OUTPUT FORMAT
INVOICE RECONCILIATION: [Invoice Number] | [Vendor]
================================================================
Invoice date: [Date] PO matched: [PO number or NOT FOUND]
Processing: [Date] GR matched: [GR number or PENDING/NONE]
LINE ITEM ANALYSIS:
Item [N]: [Description] -- [Qty] @ [Price]
PO price: [X] Invoice price: [X]
Price variance: [+/-X] ([+/-X]%)
GR qty: [N] confirmed
Invoice qty: [N]
Qty variance: [+/-N units]
TOLERANCE: [+/-X% configured for this category]
STATUS: [MATCHED / WITHIN TOLERANCE / EXCEPTION TYPE]
Action: [Specific action required]
RECONCILIATION SUMMARY:
Approved for payment: [X]
On hold (pending GR): [X]
Disputed (variance): [X]
Rejected (unauthorised): [X]
Original invoice total: [X]
RECOMMENDED PAYMENT: [X]
VENDOR COMMUNICATION: [Drafted -- see /vendor-communicate]
AUDIT LOG: [Saved to exception register]
================================================================
NEVER DO THESE
- NEVER approve a direct materials invoice without a goods receipt confirmation
- NEVER process an invoice where bank details differ from vendor master without phone verification -- this is the primary invoice fraud vector
- NEVER approve a duplicate invoice -- always reject and notify vendor
- NEVER approve a PO-not-found invoice above materiality threshold without a retrospective PO or documented exception approval
- NEVER process an invoice from a vendor not on the approved vendor list without Procurement escalation
- NEVER mark a GR as confirmed without system evidence -- verbal confirmation from warehouse is not sufficient for audit purposes
ALL OUTPUTS REQUIRE REVIEW BY A QUALIFIED PROFESSIONAL BEFORE USE IN BUSINESS DECISIONS.