What is the company/industry standard for PO tolerance?

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Q. (cont.) At my organization, we have it at 20% or $250 USD, whichever is smaller, at the PO line item level. We are considering an increase and wish to collect some benchmarking information.

A. Here are some resources for you.

First, we have a short article based on benchmark data that addresses this here: https://www.theaccountspayablenetwork.com/best-practices/benchmarking/benchmark-briefs/po-tolerances-can-save-time-consuming-exception-handling/

We also found the following:

  • Three-fourths of participants will pay invoices that differ from the PO, provided the difference is within a specific tolerance.
  • Forty-six percent of organizations that pay invoices within a tolerance base their tolerance levels on a combination of dollar amount and percentage.
  • The median organization with PO tolerances will pay invoices within $50 or 5% of the PO price.


(However, median data may not be particularly useful unless the organization is comparable in size to your organization.)

We also polled our practitioner experts on this topic recently to see what their practices are, and here are their replies:

1. Leona Messink, CPP
Our threshold is $1k and higher, and all capitalized assets.

2. Gail Kawakami, MBA, CAPP, Director, Accounts Payable & Travel, UCSF Controller’s Office
At the University of California, San Francisco, our PO tolerance is 10 percent or $500, whichever is less (by line).

3. Vickie S Branch, Director of Accounts Payable, Bell Partners Inc. 
Bell Partners Inc. has a 20 percent PO tolerance with a maximum of $400.

4. Kathleen R. Oneal, POP Team Leader, Business Services Organization – USA 
Most of our CEMEX businesses have a threshold of 5 percent or under.

5. Elise Byrd, Accounts Payable Manager, Silver Eagle Distributors
I have been an AP Supervisor or Manager for over 25 years. The standard that I have seen is 10 percent with a "not to exceed" value.

6. Chris Dritsas, Accounts Payable Manager – NSAM Financial Hub, Cameron, a Schlumberger company
Here at Cameron, we have it set for 10 percent … not to exceed $100 for price. Seems to be somewhat of an industry standard, based on the due diligence we performed before we set this up.

7. Cynthia Joseph, Accounts Payable Manager, Shutterfly
At Shutterfly we also use 10 percent.

8. Judy Bicking, IOFM Trainer and Practitioner Expert, Former Director of Shared Services, Johnson & Johnson 
It has been my experience that matching the invoice to the PO is done with a 20% tolerance not to exceed xxx dollars. However, best practice may be to mix it up. If tolerance is 20%, randomly change it to 10-15% to look for fraud. And if you're not catching any fraud at 20%, you might then want to consider adjusting it upward.

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