The contract price is not always the invoiced price.

A contract sets the terms: price per item, discount levels, indexation, period of validity. An invoice is a separate document, drawn up by the supplier, which is meant to reflect those terms. In practice this is handled in two systems that seldom talk directly to each other, contract management and invoicing, and gaps arise between them.

How do price discrepancies arise?

Some recurring patterns:

• Price changes that have not taken effect. A supplier raises the price from a certain date under the contract but invoices the new price too early, or keeps invoicing the old price after an agreed reduction without anyone noticing.
• Wrong price list when there are several contracts. Organisations with several simultaneous contracts with the same supplier risk the wrong price list being applied to the wrong order.
• Discounts that drop away. A volume discount agreed centrally is not applied consistently to each individual invoice, especially with decentralised purchasing.
• Index clauses calculated wrongly. Annual index adjustments are sometimes based on the wrong period or a different index than the one actually agreed.

On their own the amounts are often small. Across thousands of invoices and several years they become significant.

How is it detected?

Detecting this manually requires someone to compare every invoice systematically against the right contract terms at the right time, work that rarely fits into everyday finance administration. Refero analyses historical invoice flows against contract data at item and price level to identify where the invoiced price differs from the agreed price, and verifies each identified discrepancy against the underlying contract documentation before it is reported.

Read more about price and contract compliance as a service.