Procurement Glossary
Evaluated Receipt Settlement (ERS): Automated invoice processing in Procurement
November 19, 2025
Evaluated Receipt Settlement (ERS) is an automated settlement process in which invoices are paid based on goods receipt without manual invoice verification. This procedure significantly reduces administrative effort and speeds up payment processing between companies and suppliers. Find out below what ERS means exactly, how the process works, and what advantages and risks are associated with it.
Key Facts
- ERS eliminates traditional invoice verification through automatic billing based on goods receipt data.
- This requires accurate master data, trusting supplier relationships, and robust ERP integration.
- Typical cost savings of 60-80% in invoice processing by eliminating manual processes
- Particularly suitable for recurring purchases involving standardized products and stable prices
- Requires clear contractual agreements and defined tolerance limits for quantity and price deviations.
Contents
What is an Evaluated Receipt Settlement (ERS)?
ERS represents a fundamental paradigm shift in accounts payable, replacing the traditional three-way reconciliation with an automated two-way process.
Basic principle and mode of operation
With ERS, payment is triggered automatically as soon as the ordered goods are received and recorded in the system. The process is based on the assumption that the order, delivery, and agreed price match. Evaluated Receipt Settlement thus eliminates the need for a separate invoice and the associated manual verification processes.
ERS vs. traditional invoice processing
Unlike the classic three-way match check, ERS completely eliminates the invoice component. While traditional methods compare purchase orders, goods receipts, and invoices, ERS only works with purchase orders and goods receipts. This reduces throughput times from an average of 7–10 days to 1–2 days.
The importance of ERS in modern Procurement
ERS supports the digitization of the procure-to-pay process and enables seamless integration into modern e-procurement systems. In conjunction with EDI interfaces in particular, this results in highly efficient, fully automated procurement cycles.
Process steps and responsibilities
The successful implementation of ERS requires clearly defined process steps and unambiguous responsibilities between all parties involved.
Preparation phase and setup
First, precise vendor master data and contractual agreements must be established. This includes defining tolerance limits, payment terms, and escalation processes. ERP integration must be fully configured and tested.
Operational ERS procedure
The process starts with the order being placed and sent to the supplier. After the goods are received, an automatic goods receipt check is performed with quantity and quality control. The system automatically generates the payment based on the stored conditions.
Monitoring and exception handling
Continuous monitoring through defined KPIs and automatic notifications in the event of deviations ensure process control. Quantity deviations and price deviations are handled via predefined workflows.
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Key KPIs for ERS
Measuring the success of ERS requires specific key performance indicators that reflect both efficiency gains and risk indicators.
Process efficiency key figures
The turnaround time from goods receipt to payment is a key indicator of ERS success. Typical target values are 1-2 days, compared to 7-10 days for traditional invoice processing. The automation rate shows the proportion of transactions processed fully automatically and should be above 90%.
Cost reduction and ROI
Cost savings per transaction due to the elimination of manual processing average €15–25. The return on investment should be achieved within 12–18 months. The reduction of personnel expenses in accounts payable by 60–80% is another important measure of success.
Quality and risk indicators
The error rate for automatic payments must not exceed 0.5%. Deviation rates between orders and goods received should be below 2%. The number of manual interventions per 1,000 transactions is an indicator of process stability and should be continuously reduced.
Risks, dependencies and countermeasures
Despite significant advantages, ERS carries specific risks that must be minimized through appropriate control mechanisms and preventive measures.
Data quality and system dependencies
Incorrect master data can lead to incorrect payments, as there is no manual invoice verification. System failures or integration problems can paralyze the entire procurement process. Regular data validation and redundant system architectures are essential.
Supplier risks and compliance
ERS requires a high level of trust in suppliers, as controls are reduced. Fraudulent activities or unintentional errors can be more difficult to detect. Comprehensive vendor onboarding and continuous supplier evaluation are critical success factors.
Internal control weaknesses
The dual control principle is partially waived at ERS, which increases internal control risks. A lack of transparency and reduced auditing options can lead to compliance issues. Compensatory controls through automated monitoring and random sampling are essential.
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Practical example
An automotive supplier implements ERS for the procurement of standard parts such as screws and seals. Following a successful pilot phase with three main suppliers, 2,500 transactions are now processed fully automatically every month. The turnaround time has been reduced from 8 to 1.5 days, while processing costs have fallen by 70%. Tolerance limits of ±2% for quantities and ±1% for prices ensure process reliability.
- Automated goods receipt posting via barcode scanner
- Daily payment runs based on goods receipt data
- Monthly supplier evaluation for quality assurance
Trends and developments related to ERS
The further development of ERS is significantly influenced by technological innovations and changing market requirements.
AI-supported process optimization
Artificial intelligence is revolutionizing ERS through predictive analytics and automatic anomaly detection. Machine learning algorithms analyze historical data to predict supplier behavior and identify risks at an early stage. This enables proactive adjustments to tolerance parameters and significantly improves process stability.
Integration into digital ecosystems
Modern supplier portals and invoice automation create seamless connections between ERS and other procurement processes. Combining this with self-billing procedures opens up new possibilities for fully automated transaction processing.
Blockchain and smart contracts
Blockchain technology offers new approaches for transparent and tamper-proof ERS processes. Smart contracts can automatically trigger payments based on predefined conditions while ensuring the highest security standards. This development promises further efficiency gains and cost reductions.
Conclusion
Evaluated Receipt Settlement revolutionizes invoice processing through complete automation and significant efficiency gains. However, successful ERS implementation requires careful preparation, trusting supplier partnerships, and robust control mechanisms. The combination of cost savings, process acceleration, and improved data quality makes ERS a strategic competitive advantage in modern Procurement.
FAQ
What are the requirements for ERS?
ERS requires stable supplier relationships, accurate master data, and complete ERP integration. Contractual agreements must define tolerance limits, payment terms, and liability regulations. In addition, standardized products with low price fluctuations are ideal for ERS.
How does ERS differ from self-billing?
With ERS, payment is made automatically after receipt of goods without an invoice, while self-billing means that the buyer creates the invoice for the supplier. ERS eliminates invoices completely, while self-billing shifts the invoicing process. Both methods reduce administrative effort, but have different legal requirements.
Which industries benefit most from ERS?
Manufacturing, retail, and healthcare industries with high transaction volumes and standardized products benefit particularly. Companies with recurring procurements, stable supplier relationships, and low product variations achieve the highest efficiency gains through ERS implementation.
How is data quality ensured at ERS?
Regular master data validation, automated plausibility checks, and continuous system monitoring ensure high data quality. Random checks, supplier feedback, and KPI monitoring identify quality issues at an early stage. Clear data responsibilities and training support sustainable data quality.
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