In accounts payable, what is evaluated receipt settlement ERS?

Introduction / Context:
Evaluated receipt settlement, often abbreviated as ERS, is an important automation feature in modern procurement and accounts payable systems. It aims to remove the need for suppliers to send traditional invoices in certain controlled scenarios. Interview questions on ERS test whether a candidate understands three way match concepts and how process redesign can simplify invoice handling, reduce errors and speed up payments when purchasing terms are stable and well defined.

Given Data / Assumptions:

• The topic relates to procurement and accounts payable processes.
• ERS is a specific term used in many enterprise resource planning systems.
• Purchase orders and goods receipts are available and accurate.
• The goal is to settle payment without waiting for a separate supplier invoice.

Concept / Approach:
In the traditional three way match, accounts payable compares the purchase order, goods receipt and supplier invoice before approving payment. Evaluated receipt settlement streamlines this by eliminating the invoice step for certain suppliers and materials. The system uses the purchase order price and the quantity received to automatically calculate and post the liability to the supplier. Payment is then made based on this system generated settlement. The correct option must therefore describe a process in which the buyer evaluates receipts and pays without an external invoice, rather than describing unrelated concepts like bank reconciliation or customs duties.

Step-by-Step Solution:
Step 1: Recall that ERS stands for evaluated receipt settlement, which immediately suggests a focus on goods receipts. Step 2: Remember that in ERS the invoice document from the supplier is not required for payment processing. Step 3: Connect this to the idea that the system uses agreed prices in the purchase order and actual received quantities as the basis for calculation. Step 4: Review the options and locate the one that clearly states payment is made using purchase orders and receipts without a separate invoice. Step 5: Reject options that talk about travel claims, bank reconciliation, factoring or customs duties, which belong to different areas of finance.

Verification / Alternative check:
To verify understanding, consider a long term supply contract for raw materials where price and terms are stable. The buyer issues a blanket purchase order. Each time material is delivered, the warehouse records a goods receipt. With ERS, the system automatically multiplies received quantity by purchase order price, posts a payable to the supplier and schedules payment. The supplier does not need to issue a detailed invoice because both parties agree that the goods receipt acts as the billing document. This practical scenario fits exactly with the definition that payment is based only on the purchase order and goods receipt, confirming the correct option.

Why Other Options Are Wrong:
Option B is wrong because ERS is not about employee travel claims, which are handled through expense management. Option C is incorrect since bank reconciliation is a separate process of matching bank statements with accounting records. Option D describes factoring or receivable discounting, which relates to accounts receivable, not evaluated receipt settlement. Option E is unrelated to ERS because customs duty evaluation is part of import and tax processes, not of invoice less settlement in procurement.

Common Pitfalls:
A common pitfall is assuming that invoices are always required for every payment and being unaware of invoice less processes like ERS and self billing. Another mistake is confusing ERS with early payment discounting or dynamic discounting tools. Learners may also overlook the strong master data and control requirements for ERS, such as accurate prices, reliable receipts and clear agreements with suppliers. Remembering that ERS is an automated way to convert goods receipts and purchase orders directly into payables helps keep the concept clear.

Final Answer:
A process where the buyer pays the supplier based only on the purchase order and goods receipt, without requiring a separate supplier invoice.