Invoices: An invoice is the vendor's request for payment in return for the delivered goods/services.An order receipt lists the details of the items in the shipment. Order receipts: Order receipts or delivery receipts (also known as receiving reports) confirm the delivery of an order.The PO comes with a unique trackable PO number and lists details of the order including description, amount and quantity. Purchase orders: A purchase order (PO) is an official authorization sent from the buyer to a vendor confirming a requested order.Let's quickly review the role each document plays: The accounts payable 3 way match process is largely dependent on tracking details across three documents: purchase orders, order receipts and invoices.
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But companies are increasingly adopting three way matching to add an additional layer of verification and prevent overspending. The 2 way matching process is the default approach to verify invoices across organisations. And the invoice price should match the price quoted in the purchase order. The quantity billed (in the invoice) should match the quantity ordered (in the purchase order). Three way matching compares line item details and totals across purchase orders (PO), receipts for good, and vendor invoices sent to the customer.Ī 2 way match, in comparison, only compares the PO with the invoice. An invoice that fails matching tolerances is placed on hold and is sent for appropriate review. 3 way matching helps approve invoice payments faster and also flag any inconsistencies, errors or potential fraud.Ī successfully verified invoice must match the PO and receipt within acceptable tolerance levels. The goal here is to ensure that financial details (order quantity, order amount, total amount, PO number etc.) match across all 3 documents. 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). What is a 3 way match? a 3 way matchĪll invoice payments involve some sort of verification or control. Three way matching is best performed as an automated workflow powered by AP automation solutions such as Nanonets. This is vital for managing spend and cash outflow. That's why finance teams are increasingly adopting a 3 way match of vendor invoices as an essential step of their accounts payable process.īy 3 way matching supporting documents, companies can detect duplicate, erroneous, or fraudulent payments to vendors. According to an ACFE report, companies lose up to 5% of their annual revenue on fraudulent or unauthorised spends.
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