PO Invoice Price Variance

Description:

Imported Oracle standard Invoice Price Variance report Application: Purchasing Source: Invoice Price Variance Report Short Name: POXRCIPV

Parameters

Ledger, Operating Unit, Period From, Period To, Vendor Name

Used tables

gl_periods, ap_invoice_price_var_v, po_distributions_all, gl_code_combinations_kfv, po_line_locations_all, financials_system_params_all, po_lines_all, hr_operating_units, gl_ledgers, fnd_currencies, mtl_parameters, mtl_system_items_vl, mtl_categories_kfv, po_headers_all, ap_suppliers, po_releases_all, hr_locations_all_tl, rcv_transactions, mo_glob_org_access_tmp, dual

Dependencies

If you would like to try one of these Oracle EBS SQLs without having Blitz Report installed, note that some of the reports require functions from utility package xxen_util.

Example Report

PO Invoice Price Variance 01-Jul-2024 103450.xlsx

Report SQL

www.enginatics.com/reports/po-invoice-price-variance/

Blitz Report™ import options

PO_Invoice_Price_Variance.xml

Case Study & Technical Analysis: PO Invoice Price Variance (IPV) Report

Executive Summary

The PO Invoice Price Variance (IPV) report is a crucial financial control and procurement analysis tool within Oracle E-Business Suite Purchasing. It is specifically designed to identify and quantify the monetary differences between the purchase order (PO) unit price and the unit price on the supplier invoice. This report is indispensable for Accounts Payable, procurement managers, and financial controllers to monitor spending, investigate pricing discrepancies, ensure accurate cost accounting, and recover overpayments, thereby safeguarding financial integrity and optimizing procurement costs.

Business Challenge

Even with robust procurement processes, discrepancies between PO prices and invoiced prices can occur. Manually identifying and investigating these variances, especially for a high volume of transactions, presents significant challenges:

Hidden Cost Overruns: If invoices are paid without proper price variance checks, organizations risk overpaying suppliers, leading to unbudgeted expenses and erosion of profitability.
Inefficient Reconciliation: Identifying price discrepancies often requires manual comparison of POs and invoices, a time-consuming and error-prone process for Accounts Payable teams.
Supplier Relationship Issues: Recurring price variances can indicate issues with supplier adherence to agreed-upon pricing or internal errors, potentially impacting supplier relationships.
Inaccurate Cost Accounting: Unaccounted IPV can lead to inaccurate inventory costs (for inventory items) or expense tracking (for expense items), distorting financial statements and cost analysis.
Audit Compliance: Demonstrating that a robust process is in place to identify and resolve price variances is a key requirement for financial audits.

The Solution

This report offers a focused and actionable solution for identifying and managing Invoice Price Variance, enhancing financial control and procurement efficiency.

Automatic Variance Calculation: The report automatically calculates the Invoice Price Variance for each relevant PO distribution, providing a clear monetary value of the discrepancy.
Targeted Discrepancy Identification: It highlights specific invoices and POs that have price variances, allowing Accounts Payable and procurement teams to quickly focus their investigation on high-impact issues.
Streamlined Reconciliation: By consolidating relevant PO, receipt, and invoice data, the report significantly accelerates the reconciliation process, reducing manual effort and speeding up exception handling.
Enhanced Cost Control: Proactive identification of IPV enables procurement to address pricing errors with suppliers, potentially recovering overpayments or preventing future overcharges, thereby optimizing overall procurement costs.

Technical Architecture (High Level)

The report queries core Oracle Purchasing and Accounts Payable tables, leveraging specific views designed for IPV calculation.

Primary Tables/Views Involved:
- ap_invoice_price_var_v (a specialized Oracle view that provides aggregated data for Invoice Price Variance).
- po_distributions_all (for PO distribution details).
- po_line_locations_all (for PO schedule details including unit price).
- po_lines_all and po_headers_all (for contextual PO information).
- ap_invoices_all (for invoice header details).
- ap_suppliers (for supplier information).
- rcv_transactions (for receipt details, as IPV is typically recognized upon receipt).
Logical Relationships: The report primarily leverages the ap_invoice_price_var_v view, which internally calculates the variance by comparing the PO price to the invoice price for matched quantities. It then joins to various PO and AP tables to provide rich contextual information about the PO, supplier, item, and associated GL accounts.

Parameters & Filtering

The report offers flexible parameters for targeted analysis of IPV:

Financial Context: Ledger and Operating Unit define the financial scope.
Period Range: Period From and Period To are critical for analyzing IPV over specific accounting periods, allowing finance teams to focus on current or past period discrepancies.
Supplier Filter: Vendor Name allows for targeted analysis of price variances with specific suppliers, useful for supplier performance reviews.

Performance & Optimization

As a transactional financial report, it is optimized by period-driven filtering and leveraging Oracle’s pre-built views.

Period-Driven Efficiency: The Period From/To parameters are crucial for performance, allowing the database to efficiently narrow down the large volume of invoice and PO distribution data to the relevant accounting periods using existing indexes.
Leveraging Oracle IPV View: The use of ap_invoice_price_var_v is a significant optimization, as this view is typically designed by Oracle to efficiently perform the complex calculations required for IPV.
Indexed Joins: Queries leverage standard Oracle indexes on period_name, operating_unit_id, vendor_id, and po_distribution_id for efficient data retrieval across modules.

FAQ

1. What is the fundamental difference between Invoice Price Variance and Purchase Price Variance (PPV)? Invoice Price Variance (IPV) is the difference between the PO price and the invoiced price for the quantity matched to the invoice. Purchase Price Variance (PPV) is the difference between the PO price and the standard cost of an item, recognized upon receipt into inventory. Both are crucial for cost accounting but measure different aspects of pricing discrepancy.

2. When is Invoice Price Variance typically recognized in Oracle? IPV is typically recognized in Oracle Payables when an invoice is matched to a purchase order and the invoiced price differs from the PO price. For inventory items, this variance is usually expensed immediately to an IPV account. For expense items, the variance adjusts the expense account.

3. How can this report be used to improve supplier negotiations? By analyzing recurring IPV with specific Vendor Names, procurement managers can identify suppliers who consistently invoice at prices higher than agreed upon POs. This data provides objective evidence for future supplier negotiations, allowing buyers to address pricing discrepancies and enforce contract terms more effectively.

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Purchasing	Discoverer
PO Approval Assignments PO Approval Groups PO Approved Supplier List PO Cancelled Purchase Orders PO Cancelled Requisitions PO Document Types PO Headers PO Headers 11i PO Headers and Lines PO Headers and Lines 11i PO Internal Requisitions and Sales Orders PO Internal Requisitions/Deliveries Discrepancy PO Invoice Price Variance PO Purchase Price Variance PO Purchase Requisitions with PO Details	DIS Access Privileges DIS Business Areas DIS Discoverer and Blitz Report Users DIS End User Layers DIS Folders, Business Areas, Items and LOVs DIS Import Performance DIS Items, Folders and Formulas DIS Migration identify missing EulConditions DIS Users DIS Workbook Export Script DIS Workbook Import Validation DIS Workbook Owner Export Script DIS Workbooks, Folders, Items and LOVs DIS Worksheet Execution History DIS Worksheet Execution Summary DIS Worksheet SQLs
Assets	Payables
FA Additions By Source FA Asset Additions FA Asset Book Details FA Asset Book Details 11i FA Asset Cost FA Asset Impairments FA Asset Inventory FA Asset Inventory Report FA Asset Reclassification FA Asset Register FA Asset Retirements FA Asset Summary (Germany) FA CIP Cost FA Cost Adjustments FA Depreciation Projection FA Depreciation Reserve FA Journal Entry Reserve Ledger FA Revaluation Reserve FA Tax Reserve Ledger	AP 1099 Payments AP Accounted Invoice Aging AP Cash Requirement AP DPIVA Export LSNA AP Expenses AP Final Payment Register 11i AP Intercompany Invoice Details AP Invoice Approval Status AP Invoice Audit Listing AP Invoice Payments AP Invoice Payments 11i AP Invoice on Hold AP Invoice on Hold 11i AP Invoices and Lines AP Invoices and Lines 11i AP Invoices with PO, Intercompany and SLA Details AP Matched and Modified Receipts AP Negative Supplier Balance AP Open Balances Revaluation AP Open Items Revaluation AP Posted Invoice Register AP Posted Payment Register AP Preliminary Payment Register 11i AP Supplier Statement AP Suppliers AP Suppliers 11i AP Suppliers Revenue Summary AP Suppliers Revenue Summary 11i AP Trial Balance AP Trial Balance Report Definitions
Receivables	General Ledger
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