They see that 20 pallets of brochures were, in fact, delivered by the printer. Each pallet contains 5,000 brochures, so that matches both the PO quantity and the supplier invoice. Organizations automate their three-way matching process in order to remove the manual work involved. This not only prevents error, but also saves time and allows for AP teams to match larger numbers of invoices at once.

Any manual system is subject to both human error as well as fraud. Typically with a manual match, a member of the accounts payable team gathers all the relevant paper documents in a transaction in order to satisfy the matching procedures. He or she looks at each line of each document to make sure they all match. 3 way matching for accounts payable is the obvious ‘best practice’ move for large enterprises. But without the same resources, 2 way match during invoice processing is the better option for many accounting departments. A three-way match is an accounting control that ensures that the purchase order, inventory receipt, and invoice all match in terms of product, quality, quantity and price. Three-way matching saves companies time and money by allowing them to confirm and pay correct invoices quickly.

Three-way matching definition

Human error and inefficiencies can be avoided simply by migrating to automated three way match best practices. Next, you will triple-check the PO and invoice using the order receipt .

what is 3 way matching in accounting 3 way matching and the accounts payable approval workflow would help AP teams focus on higher value tasks and save them from a mountain of manual paper work. Next, the invoice and PO details are compared/matched against those in the order receipt . This receipt is prepared by the receiving department based on the packing slip that comes along with the delivery. Traditionally, an accountant in the accounts receivable department would have to gather all the relevant paper documents in a transaction in order to satisfy their matching procedures.

What is a 3-way match versus a 2-way match?

By implementing an integrated ordering and payment system, the company increased visibility into its AP processes and eliminated maverick spending. Replacing their manual 3-way matching with an automated process allowed them to process millions of invoices with ease. This move brought the company better ordering continuity, improved leverage with suppliers, and considerable cost savings. The goal of this approval process is to ensure that each invoice is consistent with the products and amounts ordered, as listed on the purchase order.

A goods or packing receipt will also be included, to indicate what items are contained in the shipment. Attract top AP talent to the company by supporting remote workers and implementing the latest technology. Finding a mismatch here may also indicate that you were charged for more or less because you did not receive the exact amount that you ordered.

Company

The first step is gathering purchase orders, goods received notes, and invoice information. This number is uniform across all three documents pertaining to the purchase. Once the PO, GRN, and invoice are gathered, the information they contain is verified. The information on the number of goods, unit price, discounts/rebates, delivery date, etc. are matched across all three documents. Manual processing causes delays and backlogs due to misplaced or missing information. Process bottlenecks result in delayed payments to suppliers, which in turn tarnishes the reputation of the company and weakens supplier relationships. To understand the three-way match in accounting better, let us first understand what invoices, purchase orders, and goods receipt notes are.

Line https://www.bookstime.com/ may also include additional information, such as comments or charges. The 4-way match is the most time-consuming but meticulous of all the processes. It should be done only when strict compliance or verification is needed. All the documents are cross-checked and inspected before finally accepting the goods or services. A three-way match can also make auditing and bookkeeping easier. If documents are complete and error-free, compiling them becomes less of a hassle.

What is 3-way Matching?

The process of three-way matching can be pretty demanding and time-consuming, especially when done manually. After all, we’re only human – and sifting through the details of numerous documents eventually results in missed, misinterpreted, or misplaced documents.