Vendor Invoice and Bill Passing

See how Purchase Bill Passing Accounting works

Enter Bill

Enter Expense/Purchase Bill
Entry Done by Store

Bill Passing

2,3,4-way Matching
Approval Done by Purchase

Audit Bill

Purchase Voucher
Audit & Payment Done by Accounts


Monitor Purchases Bills
Analysis Done by Purchase

Bill Entry
Bill Passing
Bill Audit
Bill Analysis

What is p2p-Procure to Pay cycle?

P2P connects procurement through to payment of goods
The purchase to pay process, also known as the P2P process, connects the procurement and entire supply chain processes within a company through the goods receipt process, and finally to the payment issued to the vendor. Vendor Invoice or Supplier Bills are part of p2p cycle.

What is Vendor Invoices?

A vendor invoice from a purchase order is an invoice that is produced when products or services are received according to a purchase order that was placed with a vendor. The vendor invoice contains a header, and one or more lines for items or services. A vendor invoice completes the cycle from purchase order to product receipt to vendor invoice.

Although some vendor invoices are connected to a purchase order, vendor invoices can also contain lines that don't correspond to purchase order lines. You can also create vendor invoices that aren't associated with any purchase order. These vendor invoices might represent ongoing services, such as a utility bill, and you don't have to reference a purchase order when you add them.

Along with entry of Vendor Invoice Actual physical or electronics copy should be uloaded in system for Bill Passing by various departments and Audit Purpose.

It is compulsory in India to send Invoice with goods. So GRN and Inward Stock Entry is same as Vendor Invoice or Bill Entry. Single Entry Serves both the purpose. So system of seperate store entry is outdated. Infact Stores will now enter and upload scanned vendor invoices. Purchase will do Bill Passing and Accounts Payable team will do Payments.

What happens on approval of Vendor Invoices or Bill Passing?

If Products are received stock will be updated in selected store on approval of Vendor Invoice.
If Service is received then no stock entries are passed on approval of Vendor Invoice..
In Product or Service both cases Purchase Vouchers are Automatically Entered

All GST Reports also gets updated on approval of Vendor Invoice or Bill

What is 2-way, 3-way, 4-way Matching System of Bill Passing or Vendor Invoice Approvals?

2-way match is used to compare the invoice received from vendor with the Purchase Order. 3-way match is used to match the details of PO, Goods Receipt and the Invoice document received from vendor. In Three way match the Quantity & Price is matched between PO-Purchase Order, GR-Goods Receipr & IR/PI-Purchase Invoice/Supplier Invoice/Bill. In 4 way matching an invoice is matched to the corresponding purchase order for quantity and amount, receiving, and inspection information. You can set up price tolerance percentages for legal entities, vendors, and items. If the vendor invoice line price is not in the acceptable price tolerance, you can save the invoice until it is approved for posting, or until you receive a correction from the vendor.

Various Matching is Done in following way:

Item Quantity Unit price Line net amount Matching policy Product receipt quantity match Price match Price total match QC Passed
Computer 2 2,500.00 5,000.00 Four-way Passed Passed Passed Passed
Laptop 2 4100.00 8200.00 Three-way Failed Failed Passed
Fimi Palm 2 1005 2010.00 Two-way Passed Passed

Line Itemwise 2-way Matching

Line field Invoice value Purchase order value Variance percentage Tolerance percentage Match status
Unit price 55.40 55.38 0% 0% Passed
Price unit 1.00 1.00 0% 0% Passed
Charges on purchases 50.00 0.00 100% 0% Failed
Discount 0.00 0.00 0% 0% Passed
Discount percent 0.00 0.00 0% 0% Passed
Multiline discount 0.00 0.00 0% 0% Passed
GST Percentage 0.00 0.00 0% 0% Passed
Net amount 271.60 221.52 22.61% 0% Failed
Net unit price 67.9000 55.3800 22.61% 0% Failed

Line Itemwise Three-way/Four-way matching

Line Item Invoice QTY Receipts QTY QC OK QTY 3-Way Match 4-Way Match
Computer 4.00 4.00 3.00 Passed Failed

How Vendor Invoice or Bills effects New GST Returns Filing System?

This document of vendor invoice is main input documents for GSTR2A or GST ANX-2 Report for comparison purpose.
There are 2 Parts in system: GST ANX-1 & ANX-2 for Proper Reporting of Supplies
Under GST ANX 1, all outward supplies, inward supplies under reverse charge, and imports made during a particular tax period will need to be reported by the registered taxpayers.
Under GST ANX 2, details related to all the inward supplies from registered persons, supplies received from an SEZ unit/developer, and imports made by registered taxpayers will be reported.
Once a particular supplier uploads the documents related to supply in GST ANX 1, the recipient can also easily view those supply documents in his GST ANX 2. The recipient would also have the facility to take any action against these documents by either accepting them or rejecting them or put them in pending state with action to be taken at a later date.

What are various types of Suppliers and Purchase Invoices according to GST India

3H- Inward supplies attracting reverse charge (RCM) 3I- Import of services (IMPS) 3J- Import of goods (IMPG) 3K- Import of goods from SEZ units/developers (IMPG SEZ) 3L- Missing documents (provisional credit availed)

3H-RCM: The recipient has to report invoice-wise purchases attracting reverse charge in GST ANX-1. The value and tax on RCM supplies will be auto-populated from GST ANX-1 to GST RET-1/ RET-2/RET-3. The recipient has to discharge liability and he can claim ITC based on the auto-populated figures. The recipient should hence be careful while reporting invoice-wise inward RCM supplies. Any delay can have interest implications.

How to do Purchase Accounting