Chapter 6. Purchasing 117 6.8.3 Approving an invoice Before an invoice can be approved, the system checks that it meets the following conditions: 1. If the invoice will be paid in foreign currency ( as indicated in the Currency field), there must be an active exchange rate for that currency ( in the Currency application) on the date of approval. If not, the invoice cannot be approved. ( If the exchange rate has changed since you created the invoice, the system updates the Total Base Cost field upon approval.) 2. The prices on the invoice must fall within a specified range of the prices on the purchase order ( PO). Your system administrator can define the amount by which the invoice price can vary from the PO price and still be approved in the Limits and Tolerances tab in the Security Groups application. 3. Limits must be set on how large a purchase request, purchase order, material requisition, invoice, and contract the group can approve. Use the Limits and Tolerances tab in the Security Groups application to set limits. Tolerance levels for the group regarding how much some purchasing amounts ( invoices, taxes, and services) can vary from an initial agreement must also be set. Again, use the Limits and Tolerances tab, which contains the following sections: – Organization section is for specifying the organization for which you want to set limits and tolerances. – Limits section is for setting group approval limits on how large the monetary amount can be on a purchase request, purchase order, material requisition, invoice, and contract. – Invoice Tolerance section is for specifying how large a variance the group can accept on an invoice amount. – Tax Tolerance section is for specifying how large a variance the group can accept on a tax amount. – Service Tolerance section is for specifying how large a variance the group can accept on a service amount. 4. Standard service costs added to the invoice ( such as freight charges or installation fees) must also fall within set limits ( also set in the Limits and Tolerances tab in the Security Groups application). 5. Line items that must be received before invoice approval ( items that have the Receipt Required check box selected on the Invoice Lines tab) are checked to ensure that the receipts have been entered into the system.