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. Verifying that goods were received before paying ensures that companies only disburse funds for completed, verified transactions. This reduces costly payment errors and supports clean financial reporting.

Why Ramp Bill Pay is the best way to boost AP efficiency for every business

A significant amount of time is saved and procurement/finance teams are relieved of the manual verification. Automated workflows also issue alerts and notifications to stakeholders to let them know of any pending approvals/reviews. Three-way matching is more than just an accounting practice—it is the backbone of your accounts payable process.Transparent fees, fast withdrawals, verified users trusting our platform https://mapleinvestai.org/. It ensures that every payment your business makes is accurate, justified, and supported by the proper documentation.

Reduce error rates & fraud

Data analytics will become an essential tool for three-way matching in the future. Companies can use data analytics to identify patterns in the matching process and make informed decisions. Automated systems can also help to spot discrepancies quickly and accurately, saving time and money. The next step in implementing three-way matching is to set up appropriate internal controls.

How automation works in 3-way matching

• The invoice details would be validated against the details mentioned in the PO before approving the invoice.
• If the 3 documents don’t match then the invoice is put on hold until the errors/issues are sorted.
• Typos, missed line items, or mismatched totals are common in manual processes and can lead to overpayments or incorrect approvals.
• When that time comes, three-way matching makes it easy to provide clear, consistent documentation.
• With automation handling repetitive verification, AP teams can focus on resolving exceptions instead of manually matching every invoice.

Book a demo with Peakflo and take the first step toward a more streamlined, error-free payment process. For many companies, receipt of an invoice puts the payment process, and three-way matching, in motion. At that point the company should already have the PO and proof that an order was received. By verifying that the purchase order, order receipt, and supplier’s invoice match, you know that an invoice is valid and correct before paying https://open-innovation-projects.org/blog/explore-the-benefits-of-open-source-software-erp-and-boost-your-business-operations it. It benefits your business by ensuring that the supplier invoice matches your ordered goods or services. By automating the matching process, the AP teams get more time for productive work, and invoice and payment processing can be done faster and more efficiently.

Waiting to receive https://mkes.info/2025/04/02/the-best-advice-on-ive-found/ a corrected invoice from the vendor will delay invoice approval, payment and reduce overall productivity. A variation arises when the line items, quantities, extended amounts, or total due on a vendor invoice don’t match the purchase order or receipt of goods or services. Handling variations or exceptions manually can be extremely tricky and hard to document. A manual matching process requires all documents to be collected, stored and maintained for future reference. The 2 way matching process is the default approach to verify invoices across organizations.

• Three-way matching is an AP process that businesses use to verify invoices.
• It begins with the issuance of a PO when a need for goods is identified.
• In the following sections, we will explore how three-way matching works, its importance, and how automating this process can save time and money and prevent costly errors.
• The mismatch would be flagged during 3 way match, and your team would investigate the discrepancy with the vendor before processing payment.
• The verification process is done on each line item on all documents for accurate matching.

A purchase order is generated by a customer and sent to a vendor stating the quantity and often the agreed-upon price for goods or services purchased. Upon receipt of goods by the customer, a receiving report is generated stating the quantity and quality of goods received by the customer. Accounts Payable teams often get stuck chasing down mismatches, checking line items one by one, or emailing back and forth with procurement.

They have to check the purchase order and inform the finance department about the purchasing items. The visual form builder enables the accounts payable team to set up the 3-way match workflow easily without the need for coding. In some cases, an order is completed over multiple deliveries done on different dates. For orders having multiple delivery dates, it is not possible to match the goods received against the invoice.

Need for Automating 3-Way Matching

But when you receive the invoice, you notice that the supplier billed you for eleven boxes. They’re predetermined thresholds that define acceptable differences between documents—like invoices within 3% of PO amount or variances under $100. For purchase orders, clerks need to verify completeness, confirm amounts match agreed terms, and check https://www.reinhardtpublications.com/VirginiaHistory/university-of-virginia-history-department vendor information. In high-growth businesses, every operation (both front and back-office) is inexplicably tied to investment versus reward.

The procedure is used to ensure that only authorized purchases are reimbursed, thereby preventing losses due to fraud and carelessness. Three-way matching is the comparison of purchase order, supplier invoice and goods received note (GRN). All these three documents must be matching and then we can process the payment to the supplier. We want to ensure that we have received and bill for the goods which we have ordered.