Managing invoice matching at scale—especially across thousands of vendors and global entities—requires more than manual effort or ERP defaults. HighRadius empowers AP teams to automate 2-way and 3-way matching workflows with precision, control, and speed. Accurate receiving data ensures that inventory records reflect reality, helping supply chain and procurement teams better forecast 3 way matching and reduce stock-related errors or shrinkage. This reliability strengthens supplier relationships, especially with vendors who rely on consistent cash flow. Matching just two documents (invoice and PO) accelerates approval cycles.
- This approach optimises efficiency and control, allowing organisations to process routine transactions quickly while maintaining rigorous oversight on higher-risk purchases.
- The supplier invoice has details of what was purchased and other relevant vendor contact details.
- In modern business operations, there’s a critical process that keeps the wheels of commerce spinning smoothly — the three-way match.
- With the increasing reliance on technology, it has become imperative for businesses to understand the concept of 3 way match and embrace its benefits.
- Nothing can take the wind out of your sails like manually matching printed POs with invoices and packing slips.
- To understand what 3-way matching is, businesses need to understand the three key documents involved in this process.
Why Excel Fails: The Case for Dedicated Procurement Software
The goal is to clear these matches from the board, often while working toward specific objectives like reaching a score or breaking barriers. As you progress, the puzzles become more challenging with new mechanics and levels. These games are easy to learn but require strategy and planning to master.
- Today’s systems can automatically compare documents, flagging only exceptions for human review.
- Unlike traditional ERP or CRM, Bizzi focuses heavily on back-office financial automation, especially invoices and receivables.
- The AP team reached out to the vendor, who after realising their mistake, re-shared the correct invoice with the manufacturer.
- Teams that are able to achieve automation will make the entire procurement process more efficient while positively impacting their organization’s bottom line.
- This verification process of accounting for goods can prevent cyber criminals from committing invoice fraud.
2.1. Improved accuracy and superior performance
Similar to shipping exceptions, the tax exception occurs when the invoice amount is greater than the Purchase order amount because of taxes. If you don’t know the shipping amount in advance, the vendor would add the shipping amount on the invoice. You have a different unit price in your system as compared to what is in the vendor system of record. This exception occurs when the vendor overdelivers than the asked quantity. Here is a quick summary of how to assess the effectiveness of your current 3-way match process. The invoice would remain unpaid until the discrepancy is resolved through either a Cash Disbursement Journal corrected invoice or confirmation of an additional delivery.
Automating the 3-Way Match for Better AP
Set dollar-amount cutoffs to determine which invoices need full three-way matching. High-value purchases carry the greatest financial risk, so focus your detailed verification efforts where they matter most. For example, apply three-way matching only for invoices over $5,000, while using simpler checks for https://mi-point.co.za/bookkeeping-for-a-construction-company-family/ smaller amounts. They scrutinize all three documents—PO, GRN, and invoice—looking for discrepancies down to the line item level.When something doesn’t add up, they put invoices on hold and launch investigations.
1.3. Limited visibility and impact on supplier relationships
The receiving or inventory department must also ensure that all goods and services are received in good condition. The invoice also consists of the quantities of goods or services purchased and the total amount due. The invoice must match the purchase order and delivery note for the three-way match to be successful. In addition, the system stores and organizes all electronic documents scientifically, helping to save auditing time and ensure compliance with financial regulations.
Limit three-way matching to big-dollar, one-time invoices
Regular audits of the three-way match process help identify bottlenecks, inaccuracies, and areas for improvement. Let’s take a look at how these technological advancements are redefining the 3-way match, leading us into an era of unparalleled efficiency, accuracy, and real-time audit ability. In modern business operations, there’s a critical process that keeps the wheels of commerce spinning smoothly — the three-way match. Whatever the reason for these issues, you need to work with your vendors to ensure that these issues don’t keep on happening.
A 3 way match is an internal control process that cross-references a supplier’s invoice against its corresponding purchase order (PO) and good received note (GRN). 3-Way matching is essential because it ensures accuracy and prevents fraud in the accounts payable process. By comparing the purchase order, receiving report, and invoice, it confirms that goods or services were ordered, received, and billed correctly. This reduces errors, avoids overpayments, and strengthens vendor relationships, ultimately safeguarding your company’s financial health. Three-way matching is an AP process that businesses use to verify invoices.