Purchase price variance, caught at the match
Fintra matches the purchase order, the receipt, and the bill. When the bill price differs from the PO, the variance posts to a purchase price variance account - and if it’s beyond tolerance, it’s flagged before payment.
Illustrative product view
What purchase price variance is
Purchase price variance (PPV) is the difference between what you agreed to pay on a purchase order and what a supplier actually billed. It’s where quiet margin erosion hides: a few percent over PO price across thousands of parts adds up. Catching it requires matching the bill back to the PO and the receipt.
Purchase price variance
price_variance = (bill_unit_price − po_unit_price) × matched_qty
A positive variance is unfavourable - you were billed above the PO price. Fintra posts it to a dedicated PPV account within tolerance.
The 3-way match
| Document | Confirms |
|---|---|
| Purchase order | What you agreed to buy and at what price |
| Goods receipt | What actually arrived |
| Supplier bill | What you’re being charged |
From variance to supplier scorecard
Individual variances roll up into a supplier scorecard: on-time percentage, fill rate, price-variance percentage, and lead-time statistics. That turns a stream of small discrepancies into a negotiating position - you can show a supplier exactly how often and how much they bill over PO.
- Match tolerances are configurable in procurement settings.
- Committed costs from open POs are tracked until received and billed.
- The scorecard quantifies price variance percentage per supplier.
Why PPV protects margin
Standard costs assume a purchase price. When suppliers drift above it, your real margin quietly falls below plan. A 3-way match with PPV surfaces that drift at the moment of billing - before it’s buried in inventory and only discovered when margins disappoint.
Frequently asked questions
What is purchase price variance?
Purchase price variance (PPV) is the difference between the price agreed on a purchase order and the price a supplier actually bills, times the matched quantity. A positive variance means you were billed above the PO price. It’s a key signal of supplier price drift and margin erosion.
What is a 3-way match?
A 3-way match reconciles three documents before a bill is paid: the purchase order (what you agreed to buy), the goods receipt (what arrived), and the supplier bill (what you’re charged). Matching them catches price and quantity discrepancies and duplicate or fraudulent invoices.
How does Fintra handle a price variance within tolerance?
If the bill price is within your configured tolerance of the PO price, the variance posts automatically to a purchase price variance account so a small, expected difference doesn’t hold up the bill. If it’s beyond tolerance, the exception is flagged for review before payment.
Does Fintra track supplier price performance?
Yes. Variances roll up into a supplier scorecard showing on-time percentage, fill rate, price-variance percentage, and lead-time statistics - so you can quantify which suppliers consistently bill over PO and use it in negotiations.
Stay in the loop
One practical finance briefing a week - new guides, checklists, and benchmarks.
Stop paying over PO price
Start free, no card required. Match PO, receipt, and bill and catch price variance before you pay.
Talk to us