Glossary
Evaluated Receipts Settlement (ERS)
Tags: Glossary
A process for authorizing payment for goods based on actual receipts with purchase order data, when the price has already been negotiated. The basic premise behind ERS is that all of the information in the invoice is already transmitted in the shipping documentation. Therefore, the invoice is eliminated, and the shipping documentation is used to pay the vendor.
What is Evaluated Receipts Settlement (ERS)?
Evaluated Receipts Settlement (ERS) is a valuable process in the field of logistics that simplifies the payment authorization for goods. It is particularly useful when the price of the goods has already been negotiated. ERS operates on the fundamental principle that all the necessary information for payment is already included in the shipping documentation, rendering the invoice redundant.
Traditionally, when goods are received, an invoice is generated by the vendor and sent to the buyer. The buyer then matches the invoice with the purchase order and verifies the accuracy of the goods received. This process can be time-consuming and prone to errors, as it requires manual intervention and verification.
ERS streamlines this process by eliminating the need for an invoice. Instead, the buyer relies solely on the shipping documentation, such as the packing slip or bill of lading, to authorize payment to the vendor. Since the price has already been negotiated, there is no need for additional information from an invoice.
By leveraging the information contained in the shipping documentation, ERS simplifies the payment authorization process and reduces the administrative burden on both the buyer and the vendor. It eliminates the need for manual matching of invoices with purchase orders, reducing the likelihood of errors and discrepancies.
Implementing ERS can bring several benefits to organizations. Firstly, it improves efficiency by automating the payment authorization process, saving time and resources. Secondly, it reduces the risk of errors and disputes that may arise from manual invoice matching. Additionally, ERS can enhance cash flow management by enabling faster payment processing, as there is no longer a need to wait for the invoice to be received and verified.
However, it is important to note that ERS may not be suitable for all types of goods or industries. It is most effective when the price has already been negotiated and the shipping documentation contains all the necessary information for payment authorization. In cases where additional information is required, such as quality inspections or specific terms and conditions, traditional invoice-based processes may still be necessary.
In conclusion, Evaluated Receipts Settlement (ERS) is a valuable concept in logistics that simplifies the payment authorization process for goods. By eliminating the need for an invoice and relying solely on shipping documentation, ERS improves efficiency, reduces errors, and enhances cash flow management. While not applicable in all scenarios, ERS can be a powerful tool for organizations looking to streamline their logistics operations and improve overall efficiency.