How to catch overcharges on supplier invoices

Short answer

1. Compare each line’s unit price to the price you agreed.
2. Compare price and quantity to the PO.
3. Check the supplier for the same invoice number.
4. Hold any bill that differs and ask the supplier before you pay.

Before you start

You need a record of what was agreed. That is a quote, a price list or an order. Without it you cannot say a price is wrong.

Overcharges come in a few forms:

• A unit price above the agreed price.
• A quantity above what was ordered or delivered.
• A line for something you did not order.
• The same invoice twice.

The manual way in Xero

1. Go to Business > Bills to pay and open the draft bill.
2. Compare each unit price to your quote or price list.
3. If the bill came from a PO, open the PO under Business > Purchase orders and compare price and quantity.
4. Search the supplier’s bills for the same invoice number.
5. If anything is off, leave the bill in draft and email the supplier.

Xero does not compare a bill line to a price list or to the previous bill for that item. You do that by eye.

The manual way in MYOB

1. Open the bill from the Purchases menu.
2. Compare each line to your agreed prices and the PO.
3. Look at the supplier’s earlier purchases for the same invoice number.
4. Hold the bill and ask the supplier to fix it.

The Pulsify way

1. Upload the supplier’s agreed prices under Database > Price Lists. See how to set up a supplier price list.
2. Open each bill. A line at a different price shows “Price list: $X each”. A line not on the list shows “Not in price list”.
3. If the bill links to a PO, lines that bill more than ordered or at a different price are flagged too. “PO price is $72.90 each” is an example.
4. A possible duplicate is flagged and asks you to confirm before you approve.
5. Fix or query the supplier, then approve.

Pulsify checks the price to the cent with no tolerance. It never stops approval on a price warning, so you stay in control.

Worked example

Example Roofing Supplies sends a bill for $4,180.00 ex GST. Your PO was for $4,000.00.

• Line 1: 40 colorbond sheets at $82.00. Agreed price $82.00. Match.
• Line 2: 12 ridge caps at $29.00. Agreed price $24.50. Over by $4.50 a unit, $54.00 total.
• Line 3: delivery at $126.00. Not on the PO and not on the list.

The $180.00 gap is the ridge caps and the delivery. You ask the supplier to confirm both before approving.

Common mistakes

• Checking only the bill total against the PO. Two errors can cancel each other.
• Approving small differences because they are small. They repeat.
• Not recording why a bill was held. Put the reason in the bill notes so the next person knows.

Next step

Try an invoice and see price differences flagged on your own supplier bills. More in the supplier price lists guide and the invoice checks guide.