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Manage Tax and Shipping Charges in BuyerQuest

See this topic for best practice examples of rules for managing tax and shipping charges in the procurement workflow.

Accounts Payable Process

A printable version of this topic is available here: BestPracticeTaxesShippingFinal2019Mar20.pdf

The BuyerQuest Accounts Payable  module captures tax and shipping charges on invoices at both the header and line levels. These actual charges can be used to compare against estimates and are used for effective tax and shipping cost governance.

Clients typically configure invoicing rules to ensure that actual tax and shipping costs observe the policy and tolerances of the associated purchase order. The rules are configurable and can be set up by an AP team member or site administrator.

Sample Set of Rules:

  • Reject invoice if taxes and shipping are not itemized at the invoice line-level
  • Route for review if invoice line-item tax > 15% of PO line-item total
  • Route for review if invoice shipping charges > 100% of PO-line item total or $100 in cumulative charges
  • Route for review if invoice shipping charges > $5 and PO line item category = Office Supplies

The above example set of rules helps tighten controls on taxes and shipping. It ensures that both tax and shipping are broken out separately on invoices, and it allows a detailed review of invoices where tax and shipping might be charged incorrectly or excessively. Finally, it helps to contain shipping costs for specific purchase categories like “Office Supplies” that typically require closer inspection.

The rules shown above are representative of best practice policy. Within the tax and shipping cost components, they promote greater control, better reporting, and better prevention of cost miscategorization.

Requisition and Purchase Order Process

The BuyerQuest REQ-to-PO module does not send estimated tax and shipping information in its purchase orders to suppliers. At the time of purchase, information required to determine shipping costs, such as supplier’s shipping location, is typically not yet known. Similarly, at the time of purchase, information required for determining the actual tax amount is not available.

If needed, however, a requestor or approver can always add line items to a request and enter estimated tax and shipping amounts manually. This is not common, but is available if the client chooses to do so. The suppliers can then invoice the tax and shipping charges against the separated tax and shipping line items and the client may set up invoicing rules that govern them similar to invoice rules against goods and services.