4-eyes principle for purchase related invoices

New quality feature for those who are doing the approval of purchase related invoices in Next® Invoices

Any organization requires a trustworthy approval process for invoices. When it comes to invoices related to a purchase order, the process will either ensture approval of the purchase order up-front, or require the approval of the incoming invoice upon arrival of the ordered goods. In the latter case, the 4-eyes principle will now ensure that at least 2 persons will approve the invoice.

When approver 2 completes his task, Next® will ensure that the approval is within his approval limit. When the limit is is exceeded, an additional approval is required.

The 4-eyes principle relies upon the definition of the organization. For each individual approver, you define the 2nd approver explicitly, as shown in green in the following table.

Line #1 states that JADIX will approve purchase invoices, received by JATYS, and vice verse as stated in line #2:


Approver ID


Currency


Purchase: Approval limit


Triviality Amount 



Purchase: Additional approval by


Purchase: Escalate to

JATYS


EUR


5000


0



JADIX


BEWAD

JADIX


EUR


5000


100



JATYS


BEWAD

BEWAD


EUR


49,999


0



DOBOW


DOBOW

DOBOW


EUR


10,000,000


0



BEWAD




When JADIX is the 2nd approver, the information with yellow tells that he is allowed to approve up to 5.000 EUR. If the limit is exceeded, BEWAD is the direct superior who will process the invoice.

The 4-eyes principle is enabled on a company level. In the same configuration it is decided how the hierarhical approval is done from the 2nd approver and to the final approval.

It is possible to approve on all levels, until the approval limit is reached - or approve directly by the approver with the correct approval amount.



Process

4-eyes approval with additional approval when approval limit is exceeded

Example 1: Invoice payable amount < Approval limit

An invoice of EUR 4,500 is received by JADIX

Approval sequence: JADIX, JATYS

Example 2: Invoice payable amount > Approval limit

An invoice of EUR 35,000 is received by JADIX.

Approval sequence: JADIX, JATYS, BEWAD (approval limit 49,999)


Strict 4-eyes approval, with authorized 2nd approver

Example 1: Invoice payable amount < Approval limit

An invoice of EUR 4,500 is received by JADIX

Approval sequence: JADIX, JATYS

Example 2: Invoice payable amount > Approval limit

An invoice of EUR 35,000 is received by JADIX.

Approval sequence: JADIX, BEWAD (approval limit 49,999)

Example 3: Invoice payable amount < Approval limit AND Invoice amount < Triviality amount

An invoice of EUR 50 is received by JADIX.

Approval sequence: JADIX

Since the invoice is below the triviality amount of JADIX, no additional approval is required.


Cost/Purchase Approval Configuration

Configuration is done in the "Approval Configuration".

The configuration is defined by the different invoice categories, which is defined by comparing the invoice payable amount with the triviality amount and approval amount from the user.

The illustration below shows the 3 different categories of invoices for Jadix, with a triviality amount of 100, and an approval limit of 5000.

After 1st approval

       When invoice amount <= triviality amountESCALATE  NEXT LEVEL; ESCALATE HIGHEST LEVEL; USE 2ND APPROVER  ; APPROVE

       When invoice amount <= approval limit:   ESCALATE  NEXT LEVEL; ESCALATE HIGHEST LEVEL; USE 2ND APPROVER  ; APPROVE

       When invoice amount > approval limit:   ESCALATE NEXT LEVEL ; ESCALATE HIGHEST LEVEL ; USE 2ND APPROVER  ; APPROVE

After additional approvals

       When invoice amount <= triviality amount: ESCALATE  NEXT LEVEL; ESCALATE HIGHEST LEVEL; USE 2ND APPROVER  ; APPROVE

       When invoice amount <= approval limit:   ESCALATE  NEXT LEVEL; ESCALATE HIGHEST LEVEL; USE 2ND APPROVER  ; APPROVE

       When invoice amount > approval limit:   ESCALATE NEXT LEVEL; ESCALATE HIGHEST LEVEL ; USE 2ND APPROVER  ; APPROVE


Future enhancements

No enhancements are planned

For the techies

The 4-eyes principle can be enabled per each match-statuscode. This allows a maximum flexibility to the process administrator.

The maintenance of purchase status codes is handled through the administration module in Next®:

Additional information

Please refer to the online product guide for additional information on this feature, once it is released.

Commercial terms and conditions

This new feature is available at no additional cost, to users with an active service plan. Any consultancy assistance will be invoiced.

Disclaimer

Despite our best efforts, we may be forced to change both content and expected delivery of future product updates without notice.  


Details

Title:

4-eyes principle for purchase related invoices

Type:

New feature

Status:

Released

Release time:

June 2021

Affected products:

Next® Invoices

Audience:

Business users
Next® Admins
Next® Specialists
Developers
Architects
Operations

Classification:

Public

Responsible product manager:

Jørn Christensen

Updated:

03.05.2021

By: 

Henrik Fjorback