Procurement Glossary
Credit memo procedure (ERS): definition, application and advantages in Procurement
November 19, 2025
Evaluated Receipt Settlement (ERS) is an automated invoice settlement process that eliminates the need for traditional invoicing by suppliers. Instead, the company automatically creates a credit note based on the purchase order and goods receipt and initiates payment. Find out below what exactly the credit note procedure is, which methods are used and how you can make the most of the benefits.
Key Facts
- Automated invoice processing without supplier invoice through system-controlled credit note creation
- Reduces processing time by up to 80% and eliminates manual invoice checks
- Requires precise master data and contractually agreed conditions with suppliers
- Particularly effective for standard items and recurring orders
- An integral part of modern purchase-to-pay processes
Contents
Definition: Credit memo procedure (ERS)
The credit note procedure revolutionizes traditional invoice processing by fully automating the payment process.
Basic principle and mode of operation
With the credit note procedure, the purchasing company automatically creates a credit note based on the agreed conditions once the goods have been received. The system compares order data with goods receipt information and triggers payment without a supplier invoice.
- Automatic credit note creation after goods receipt
- System-controlled condition application
- Direct payment initiation without manual verification
Credit memo procedure vs. traditional invoice processing
In contrast to conventional factual invoice verification, ERS completely eliminates the supplier invoice. While traditional processes require a three-way reconciliation between purchase order, delivery bill and invoice, ERS works with a two-way reconciliation.
Importance in modern Procurement
The credit note procedure is a core component of digital purchase-to-pay processes and enables fully automated processing of standard purchases. It significantly reduces process costs and speeds up supplier payments.
Methods and procedures
Successful implementation of the credit note procedure requires structured procedures and precise system configuration.
System configuration and master data maintenance
The basis is exact master data maintenance with stored supplier conditions. All prices, discounts and payment terms must be available in the system.
- Complete condition maintenance in ERP systems
- Automatic price validation for goods receipt posting
- Configuration of tolerance limits for quantity and price deviations
Supplier integration and agreements
Suppliers must contractually agree to the credit note procedure and waive their own invoicing. The terms of payment are clearly defined and stored in the system.
Process automation
Modern ERP systems enable fully automated ERS processing with integrated workflow rules. Defined escalation processes take effect in the event of deviations.
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Important KPIs for credit note procedures (ERS)
The success of the credit note procedure is measured using specific key figures that evaluate the efficiency and quality of the automated processes.
Degree of automation and throughput times
The proportion of automatically processed transactions indicates ERS maturity. Typical target values are over 90% for suitable Categories. The average processing time should be less than 24 hours.
- ERS rate: proportion of automatically processed invoices
- Lead time from goods receipt to payment
- Error rate for automatic credit notes
Cost efficiency and savings
The cost savings resulting from the elimination of manual invoice verification are a key KPI. Typical savings are 70-80% of the original processing costs per invoice.
Supplier performance
The quality of supplier integration is measured using deviation rates and complaint rates. Successful ERS partners show consistently low deviations in terms of quantities and deadlines.
Risks, dependencies and countermeasures
Despite considerable advantages, the credit note procedure involves specific risks that must be minimized by taking appropriate measures.
Master data quality and system dependency
Incorrect or incomplete master data leads to incorrect credit notes and payments. The high system dependency requires robust IT infrastructures and backup processes.
- Regular master data validation
- Implementation of plausibility checks
- Backup procedure for system failures
Supplier risks and compliance
Not all suppliers are suitable for ERS. Unreliable partners or complex condition structures can lead to problems. Control mechanisms are essential.
Legal and tax aspects
The credit note procedure must comply with tax law requirements and ensure proper accounting. Regular compliance checks and documentation are essential for legally compliant application.
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Practical example
An automotive supplier implements ERS for C-parts procurement at a screw dealer. After goods receipt of the 1,000 M8x20 screws ordered, the ERP system automatically creates a credit note for 89.50 euros based on the stored unit price of 0.0895 euros. Payment is made automatically after 14 days in accordance with the agreed payment terms.
- Processing time reduced from 15 minutes to 2 minutes
- Elimination of manual invoice verification
- Automatic discount utilization through on-time payment
Current developments and effects
The credit note procedure is constantly evolving and benefits from technological innovations in the procurement sector.
AI-supported process optimization
Artificial intelligence is revolutionizing the ERS through predictive analytics and automatic anomaly detection. Machine learning algorithms identify patterns in supplier behaviour and dynamically optimize tolerance parameters.
- Automatic detection of price deviations
- Predictive maintenance for master data quality
- Intelligent exception handling
Integration into digital ecosystems
ERS is increasingly being integrated into comprehensive e-procurement platforms and enables seamless end-to-end automation. Cloud-based solutions make implementation much easier.
Blockchain and smart contracts
Emerging technologies such as blockchain create new opportunities for transparent and immutable ERS transactions. Smart contracts can execute payment triggers fully automatically based on predefined conditions.
Conclusion
The credit memo process (ERS) represents a milestone in the automation of purchase-to-pay processes and enables significant efficiency gains. When implemented correctly with reliable suppliers and high-quality master data, it reduces processing times by up to 80% and eliminates manual sources of error. The strategic importance of ERS will continue to increase due to technological developments such as AI and blockchain. Companies should consider ERS as an integral part of their digitalization strategy and implement it step by step.
FAQ
What is the main difference between ERS and traditional invoice processing?
With the credit note procedure, the supplier invoice is completely eliminated. The company automatically creates a credit note after receipt of the goods and arranges payment, while traditionally a three-way reconciliation takes place between the order, delivery bill and invoice.
For which suppliers and Categories is ERS suitable?
ERS works best with reliable suppliers with standardized products and stable prices. C-parts, consumables and recurring services with clear service descriptions and fixed conditions are particularly suitable.
What requirements must be met for ERS?
Complete master data, contractually agreed conditions, reliable suppliers and an efficient ERP system are essential. In addition, legal framework conditions must be observed and internal control processes established.
How is the quality of the credit note procedure ensured?
Through regular master data validation, spot checks, automatic plausibility checks and defined tolerance limits. Deviations trigger workflows and continuous monitoring of KPIs ensures high process quality.
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