Building a schedule of rates from the invoices you've paid
Plenty of supplier relationships run on a phone call and a handshake rate. That's fine until you want to check an invoice, because a rate check needs a rate. The invoices you've already paid are the best record of what you agreed in practice.
In short
- With no written schedule, the invoices you've already paid are the best record of the prices you agreed in practice.
- Note each item's code or description, unit and price excluding GST. An item billed at the same price on three or more invoices is a good candidate.
- Leave out queried invoices and one-off prices, and send the schedule to the supplier to confirm.
Start from invoices you accepted
Take the last few months of paid invoices from one supplier. For each item, note the supplier's code or description, the unit, and the unit price excluding GST. An item billed at the same price on three or more invoices is a good candidate for an agreed rate.
What to leave out
Leave out invoices you queried or had credited, one-off prices, and items whose unit changes between invoices. If the price stepped up partway through, don't average it: decide which price you actually agreed, and from when.
Confirm it with the supplier
A schedule you built yourself is your record, not the supplier's promise. Sending it to the supplier to confirm turns it into something both sides can point to when an invoice doesn't match.
Use it on the next invoice
Once you have the schedule, check each new invoice's lines against it on the invoice date. Items that aren't on it stay unchecked, and it helps to see how many of those there are rather than assume they are fine.
A rate check doesn't replace the GST paperwork: to claim the GST credit on a purchase over $82.50 including GST you still need a valid tax invoice from the supplier.(ATO: When you can claim a GST credit)
How CostCode does it
CostCode proposes a schedule for each supplier from the invoices you've already uploaded: each item's usual price excluding GST, grouped by supplier code or description and unit, with a reason beside every item it doesn't suggest. A person ticks the rates you agree with and saves, and CostCode re-checks that supplier's invoices against it. Lines with no agreed rate stay unverified with the reason, never passed.
Questions
How many invoices do I need to build a schedule?
A few months from one supplier is usually enough. An item seen at the same price on three or more invoices is a reasonable candidate.
Should the rates include GST?
Keep rates excluding GST and check GST separately. That way a GST slip and a rate difference don't hide each other.
Is a schedule I built myself binding on the supplier?
Not on its own. Send it to the supplier to confirm, so both sides have the same record.