What is Evaluated Receipt Settlement?

Evaluated receipt settlement (ERS) is an automated system used by businesses for the receipt and payment of goods. It is used by many companies including General Motors.

Process

When a company receives goods from a vendor, the ERS program pays the bill without the vendor sending one to the company. The charged prices are typically based on a catalog or other means of previously agreed-upon prices. When a company orders goods, the supplier electronically sends an advance shipping notice (ASN). The buyer compares it to the actual goods received, verifies the ASN and approves it. Payments are automatically generated by the ERS when they are due.

Features

An ERS system establishes terms of payment, prepares an invoice, posts it and pays it. It also has the capability of producing credit memos for returned or damaged goods. For this system to work, the supplier and buyer must have an ERS system.

Benefits

An ERS system eliminates the need for vendors to issue bills to buyers. It saves both companies time by eliminating paperwork. Accounts payable and accounts receivable workers are relieved of accepting, entering and paying or billing invoices. It also offers consistency to the buyer. They always know exactly what they are charged for goods prior to shipment.

References

• North Carolina State University: What is Evaluated Receipt Settlement?
• The Accounts Payable Network: Evaluated Receipt Settlement (ERS)
• Australian Government Department of Finance and Deregulation:Evaluated Receipt Settlement (ERS)