Authorize Payment Lines

Explanation

Use this activity to authorize payment lines in a Contractor Order so they can be progressed to Purchase Orders (POs) and invoicing. Authorization can be handled automatically (based on system settings) or manually (user-driven).

Automatic Authorization

This activity enables the automatic authorization of payment lines, and the creation of Purchase Order (PO) Lines based on predefined conditions in the Contractor Agreement Line. It reduces manual review efforts by ensuring that payment lines are only authorized if no modifications have been made or if the costs remain within the agreed limits.

Users can control this process through two settings on the Agreement Lines and Service Contractor:

1. Automatically Authorize Payment Lines – When enabled, the system checks for changes in the payment lines before automatically setting them to Authorized.
2. Automatically Create Purchase Order – When enabled, purchase order lines are automatically created once payment lines are authorized.

If a contractor reports work completion (Order Reported), the system verifies that:

• No changes have been made to the payment lines ( the confirmed values have not changed).
• No new payment lines have been added.
• Payment line costs do not exceed the agreed amount in the Contractor Agreement.

If these conditions are met:

1. The system sets the payment lines to Authorized automatically.
2. If Automatically Create Purchase Order is enabled, a Purchase Order is created, the payment lines and Contractor Order are set to Closed, and Cost Lines are created for the purchase.

In addition to the setting on the Contractor Agreement Line, the same Automatically Authorize Payment Lines setting is defined on the Service Contractor level.

Precedence rules:

• Agreement Line setting overrides Service Contractor setting.
• Service Contractor setting applies only if no Agreement Line setting exists.

Note: When the source of a payment line is Planning, and the line has an Invoice % of 0 with a valid Planning Line reference, it is automatically authorized once the Contractor Order is Accepted. This ensures that non-billable or zero-value planning-related payment lines are authorized automatically, eliminating unnecessary manual actions and streamlining Contractor Order processing.

Manual Authorization

For manual authorization, users can review and authorize payment lines before Purchase Order creation, ensuring greater control over contractor payments.

The Authorize command is available on the Contractor Order once its status is Order Reported.

User reviews and approves lines which ensures:  

• All payment lines are authorized, provided they meet the Not-To-Exceed (NTE) validation.
• The Contractor Order’s authorization status is updated to Work Authorized.

If a Contractor Order contains no payment lines, this action is blocked, and a validation message is displayed.

If some payment lines are already authorized and others are not, only the remaining lines are authorized, and the Contractor Order status is updated accordingly.

If a new payment line is added after the order is authorized, the Contractor Order’s status reverts to Order Reported, requiring re-authorization.

Purchase Order Consolidation

Authorized payment lines from the same Contractor Order can be transferred to a single Purchase Order. This creates one Purchase Order with multiple lines corresponding to the authorized payment lines, rather than generating separate Purchase Orders per line.

• When all payment lines are authorized, the Contractor Order is marked as Work Authorized.
• A Transfer to Purchase Order action on the Contractor Order consolidates all lines into a single PO with multiple lines.

Authorization Status and Not-To-Exceed (NTE) Limit Handling

The following logic applies to how Contractor Order authorization and Not-To-Exceed (NTE) handling are reflected in the system:

• NTE Approval Status indicates whether the Not-To-Exceed (NTE) Limit has been exceeded and approved.

The NTE Approval Status displays the following values:

• Approved – when the NTE Limit is exceeded and explicitly approved during authorization.
• Not Approved – when the NTE Limit is exceeded but not approved.
• Not Applicable – when the NTE Limit is not exceeded.

During authorization, if the total value of confirmed payment lines exceeds the NTE Limit:

• The system prompts the user to confirm whether to approve the overage.
• If approved, the payment lines are set to Authorized, the Contractor Order's status updates to Work Authorized, and the NTE Limit is updated accordingly.
• A badge appears on the Contractor Order indicating that authorization above the NTE limit has been approved.

If the NTE Limit is not exceeded or does not apply, authorization proceeds without additional confirmation.

Prerequisites

• The Contractor Order must be set to Order Reported, indicating that all time, materials, and work tasks are completed.
• The Agreement Lines or Service Contractor must have the relevant toggle settings enabled.

System Effects

• Payment lines are automatically authorized if no changes or additional costs exist and the relevant settings are enabled.
• Purchase Order lines are created if configured, and the Contractor Order is set to Closed upon authorization.
• A single Purchase Order with multiple lines can be created for all authorized lines.
• The Contractor Order’s authorization status updates to Work Authorized if all payment lines are authorized.
• Status is reset to Order Reported if new lines are added post-authorization.

Pages

Contractor Orders
Request Work Task

Activity Diagrams

Create Payment Lines