GR/IR is the SAP process designed to perform the three-way match – purchase order, material receipt, and vendor invoice. It uses a clearing account to record the offset of the goods receipt and invoice receipt postings. Once fully processed the postings in the clearing account will balance.
This balancing is performed at the Purchase Order Line Item based on the quantity entered on these documents. Price variance is calculated and recorded with these posting; exchange rate variance can be as well. Small differences can be written off using transactions MR1.
This discussion assumes the purchased materials are using Price Control S (Standard) and not V (Moving Average).
The quantity, as well as the amount, on the Goods Receipt and Invoice Receipt postings is important. To record to Purchased Price Variance (PPV), Goods Receipt must have been posted. For Invoice Receipts only, there is no posting to price variance. There can be additional variance postings on Invoice Receipts after Goods Receipts are posted for differences between the PO price and actual price paid.
When postings Goods Receipts, the price variance is based on the PO price, unless Invoice Receipt has already been posted, then it is based on actual price paid. If Invoice Receipt has already been posted, the Goods Receipt will be based on the Invoice Receipt up to the quality of the IR, after that is will use the PO price again.
After all postings have been recorded to a Purchase Order Line Item, the net PPV posted will be the difference between the actual price paid and the standard cost of the material.