SAP Tolerance Limits: Explanation, Demo and Configuration - YouTube

in this video i will explain the meaning of  tolerance limits in sap and how to configure them  

in the purchase order and the purchase invoice  if you find the content on this channel helpful  

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the tolerance limit is the difference  between any two numbers in the system  

and you can find it in all sap modules and the  difference can be either a value or a percentage  

so for example in the purchase order when we  insert the purchase price of any item we can  

configure sap to check the purchase price against  the cost of the item in the material master data  

and if the difference is bigger than the tolerance  limit then the user will either receive a warning  

message or an error message and this will notify  the user to check and confirm the details inserted  

and this is very important let's assume that sap  is not going to compare the purchase price against  

the cost of the item and the user who is doing  the purchase order he did a mistake he inserted an  

additional zero in the price so instead of posting  a price of 10 usd per piece he inserted a price of  

100 usd per piece and this is a very easy mistake  now after this he saved the purchase order and  

we move to the second step in the process which is  the goods receipt and when we do the goods receipt  

no one is checking the value the stock keeper  is receiving some items he is going to count  

the quantity he received and he is going to post  a goods receipt and the financial entry we post  

at the goods receipt time will be wrong because  the value of the purchase order is wrong we are  

going to discover the mistake only in the invoice  receipt when the accountant does the three-way  

matching where he is going to compare the  purchase order against the goods receipt against  

the invoice receipt and in the purchase order  he will find a price of 100 but in the invoice  

he will find the price as 10 usd per piece and  here he will discover the mistake and this can  

be very complicated because most of the time the  inventory that we received is already consumed  

so if we are a production company then we receive  some raw materials these raw materials go directly  

to the production line then after a while we  receive the invoice we find that there was a  

mistake in the purchase order we have to go and do  either adjustment entries which is not justified  

so it's not related to the purchase order or  we reverse all the goods and movements we did  

trying to fix the mistake that someone did in the  purchase order when he inserted an additional zero  

by mistake so now you understand how important  the tolerance limit is and we can configure the  

tolerance limit to be either a percentage or a  value so for example if the user is inserting  

a purchase price that is 10 percent higher than  or lower than the cost of the item then he will  

receive a warning message so he can confirm his  entries the tolerance limits also exist when we  

are posting the invoice for the purchase order so  if the user tries to insert a value in the invoice  

that is much higher or lower than the value we  agreed on in the purchase order he will either get  

a warning or an error message and in this case he  has to check with the vendor whether the invoice  

is wrong or he has to check that he inserted the  right values in the screen now let's go to sap  

s4hana and see how we can configure the tolerance  limits for the purchase order and the purchase  

invoice now i will start by showing you how the  tolerance limit message looks like then i will  

go into the configuration to check the message  let's start a purchase order so transaction ME21n 

vendor ag01 again the same  information like every time

material is 3031

plant eg10

and quantity is 100  

storage location is ag 11. okay now this is  a material that i'm going to buy now and if  

we check the material master data so double  click here sorry double click on the material

and go into accounting one you can see that this  is a moving average material and the periodic unit  

price or the moving average is 20 per 1 meter so  this is our price 20 per one now let's go back  

to the purchase order now i'm going to change  the price to be completely different from this  

amount so we can see the tolerance limit message  so let's say i'm going to buy one meter for 50 inr  

now this is the message that is related to the  tolerance limit so effective price is 50 inr  

material price is 20 inr so it works whether you  have a material that is using moving average or  

a standard cost both of them will work and as you  see this is a warning message so it's yellow and i  

can click on ok and i can continue processing the  pictures order normally as if nothing happened so  

the warning message is only a notification to the  user that something might be wrong but it's not an  

error there is a way in the system to convert most  of the messages including this one from warning to  

error if needed this is something that's not  related to the tuner instrument configuration  

it is actually related to any message you see in  the system so whenever you find a warning message  

usually there is a way to transfer it to an error  message and this i will show in a different video  

but for now let's look into the tolerance limit  messages so now because i have a net price  

that is much higher than the cost i have in the  material master data i receive the owning message  

for the tolerance limit how can we configure this  let's go into the configuration so i will move to  

the configuration screen /oSPRO click on sap  reference img go into material management

purchasing we are now working with the tolerance  limits in purchase order so open purchase order  

as i told you you can find tolerance limits  everywhere so for every transaction or for  

every area of the system you have a  different configuration transaction  

this one and look for set tolerance limit  for price variance so if you want to know  

more details about the configuration activity as  usual you can click on the activity documentation  

otherwise you can just go directly  into the screen and here you have  

the configuration for the tolerance limit  by company code so my company code is AG01

and here we have two transaction keys or  tolerance keys so the first one is for price  

variance the second one is from the maximum cash  discount deduction allowed now i'm working with  

the price variance one if you understand the  concept from the price variance you can apply  

it to the maximum cash discount or you can apply  it anywhere else so for now i am changing this one  

pe so double click so for the tolerance key  p price various purchasing company code ag01  

amounts in inr we have lower limit tolerance and  upper limit tolerance lower limit this means that  

you are the the purchase price is lower than the  cost upper limit means that the purchase price  

is higher than the cost so for upper limit  we can have either absolute or percentage  

and same for lower limits so absolute means  a value and percentage is a percentage of the  

value you are inserting so for example if i  say i want to check the absolute limit and i  

say 5 inr it means that we cannot exceed a  difference of 5 a in r even if the price is  

1 000 we can never exceed 5 inr but if i say a  percentage of 10 it means that if the price is  

one thousand or if the cost is one thousand then  the price can be up to one thousand one hundred  

we have ten percent tolerance percent tolerance  limit allowed so the configuration i have here is  

to check the limit with a percentage and  the maximum percentage allowed is 10 percent  

i also have a check for the lower limit so if the  price of the in the purchase order is lower than  

the cost it can be okay up to 20 percent  after this i will receive earning message  

so let's see if this is correct so as you see  here we have 10 percent allowed let's go back to  

the purchase order and the the cost for the item  is 20 and we have 10 allowance which means we can  

buy up to 22 without receiving a message so let's  say 21 inr so this is still higher than the cost  

the cost is for 20 but now i am inserting 21. if  i check the winning messages there is no earning  

message for the tolerance limit why because  i am within the 10 percent that i configured  

and if i exceed so if i say 25 for example and  then enter i will get the warning message because  

i exceeded the 10 percent so now you understand  how the tolerance limit works this is how it works  

with a percentage you can use the same example  and configure an absolute value it will work the  

same way now i will click on ok and continue  with my process so save the purchase order

copy the po number then i will post  the invoice so let's go slash n m-i-r-o  

so now we know how the translate works for  

the percent order let's see how it works  for the invoice invoice date 2601 2020

the pictures order number uh 2021

and the po number is this enter now as you see i  don't have an amount or a quantity because we did  

not post the goods receipt in this case we have  to insert the amount and the quantity manually  

so the purchase order had 100 units and the price  was 25 each so the amount i'm going to pay now  

let's say five thousand and the  quantity is again one hundred

so the total is five thousand and now let's  look into the warning messages we have here  

and there is one message saying price too  high tolerance limit of five percent exceeded  

so this is the tolerance limit  for variance verification actually  

it is one of the tolerance limits because in voice  verification has many tolerance limits and i will  

show you this in the configuration now so how can  we configure this five percent let's close this  

and again go to the configuration screens  spro sap reference go to materials management

purchasing no this time we will go  into logistics invoice verification

and here there is invoice block then set tolerance  limit this is a different transaction than the  

one we used for purchase order and it also  works the same way with the company code so  

my company code is ag01 now this time for invoice  verification see how many tolerance keys we have  

as i told you there are many tolerance limits  related to the invoice verification so for example  

you have amount for item without order reference  or with order reference or form small difference  

automatically and many others now if you would  like to understand the difference between these  

two tolerance keys you can go back to the spro  menu here and click on the documentation here  

sap is explaining why everyone is used now the one  that is impacting my demo is the price variance so  

if i go again to my company called ag01 and this  is the one that's impacting me price variance  

so if i click here we also have lower limit upper  limit the same as the one used in pitches order  

but these are different limits that are used  for price variance in invoice verification so  

for lower limit we have absolute percentage for  upper limit this is the one i'm interested in  

so absolute and we have percentage so as  you see here we have check limit 100 000 inr  

so the if the invoice is 100 000 inr higher than  the purchase order then the user will receive a  

warning and i also have a percentage check limit  at five percent so if the invoice amount is five  

percent higher than the purchase the purchase  price we should get a warning message which  

is what happened when we did the invoice right  now so if i go back the warning i'm getting here  

is tolerance limit of five percent exceeded the  what i wanted to show you here is if we have both  

the value and the percentage configured sap will  pick the lower one so since five percent is lower  

than one hundred thousand sap is picking five  percent but if i have a value that is lower than  

the percentage sap will pick the value so  if i go here and i make this one inr save

now let's go back and try  to process the invoice again  

remember that whenever you change the  configuration you have to restart the transaction

so now i'm restarting the invoice  and again the same details

purchase order

and the amount is 100 let's say again  5000 the same amount and the same quantity

amount is 5000 now i'm getting the warning message  if i check the message is a little different this  

time price too high tolerance limit of 1i and  r exceeded because the value is lower than the  

percentage that we set up in the configuration sap  is checking with the value now we understand the  

meaning of tolerance limits in sap and how they  can be configured for purchase orders and invoice  

verification if you like the video don't forget  to share it with others who may be interested  

and leave me your comments tell me if  you find it helpful and whether you have  

any experiences with this topic thank you  for watching and i'll see you again soon