What Is 3-Way Matching: Benefits And Process

DocuClipper is trusted by over 10,000 professionals for accurate and quick data extraction from financial documents such as bank statements, invoices, receipts, purchase orders, and tax forms. Overall, 3-way matching is a very popular method to ensure you process your invoices correctly while avoiding any costly mistakes or fraud. That’s why three-way matching is used by over 80% of the Fortune 500 companies in the US. An automated digital-first approach ensures that all records are consistent and provide a single source of truth.

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Vendors who consistently send accurate invoices earn higher ratings, allowing for streamlined verification of their transactions. This targeted approach puts your verification muscle where you need it most while rewarding reliable partners with faster payments. Working behind the scenes, the audit team ensures the integrity of your matching process. They create detailed purchase orders that specify exactly what the company needs.

• Accurate matching is paramount to prevent erroneous payments and ensure financial control in the “3 way invoice matching” process.
• This payment verification technique validates the information across the trio of related documents.
• Put all together, and you get a procurement automation tool that simplifies the entire process so you can process invoices faster and safely.
• Three-way matching is an AP process that businesses use to verify invoices.
• These examples will provide practical insights, helping you see how this method ensures accuracy and efficiency in invoice processing.

The three way matching process

The GRN captures the actual delivery date and may include notes about damaged items or partial shipments. If an item interpreted by AP Essentials or AP Agility is of uncertain accuracy, or if it falls outside of the rules defined by the AP administrator, the program flags the information for review. If an invoice does not match, users can quickly double-check the imported data against the original image or look deeper for the discrepancy. Here are just a few benefits of working 3-way matching into your accounts payable process. Blockchain could create a new paradigm of trust and efficiency in the “3 way matching 3 way matching process,” complementing existing automation solutions. When mismatches occur, the software streamlines the resolution process, preventing payment delays.

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One primary benefit is the remarkable reduction in errors and discrepancies. Automation ensures that the matching process is consistent and precise, mitigating the risk of human errors that often occur in manual processes. This heightened accuracy results in fewer discrepancies and prevents costly mistakes, such as overpayments or incorrect payments, providing a strong financial safeguard for organizations. The main goal of a 3-way match is to ensure payment accuracy by verifying that the details on the Purchase Order, Goods Receipt, and Invoice align. This process helps prevent overpayments, reduce errors, and ensure that businesses only pay for goods or services that were ordered and received, improving financial control and efficiency.

Invoices

Order.co gives you one platform for purchasing, vendor management, and automating your AP processes to save you the time and expense of manual data entry and human error. Many businesses have trouble keeping track of which suppliers are approved, where everything was ordered from, and when deliveries are due. Ordering from multiple vendors on different sites and completing several checkout processes can lead to disorganization and confusion.

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This could be just laziness on their part or multiple people are responsible for submitting the invoices. Start with your key vendors and setup catalogs in your purchasing process and see the immediate reduction in exceptions generated because of the 3-way match process. To overcome these issues, work proactively with your suppliers to ensure that the data is correct. Now the system is fully automated, there is no way to check if the invoice is correct before it is sent and that leads to data issues.

B2B Payments

• When mismatches occur, the software streamlines the resolution process, preventing payment delays.
• We talked about the technical aspects of setting up a 3-way match process.
• Three-way matching supports Sarbanes-Oxley (SOX) compliance and strengthens internal controls.
• The 3-way matching process is critical for keeping business finances healthy.
• The procurement team issues a detailed purchase order specifying the required goods or services, including item descriptions, quantities, pricing, delivery timelines, and payment terms.

The AP department receives the invoice, often through automated channels like EDI or AP portals. This AP process guarantees that what is delivered matches the original order every time. This report is crucial because it provides physical proof that the company actually received what was ordered. The primary difference between the two are in 2-way matching, there are two documents matched whereas in the 3-way matching, there are three documents matched with each other. The goods ordered through a purchase order are received by https://premshops.com/construction-budget-planning-how-to-set-realistic/ the appropriate authority such as stores personnel, inventory manager, or warehouse gate-keeper, who issues a GRN or Goods Received Note. The supplier sends an invoice to the buyer against the sale of goods or services ordered through a purchase order.

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Invoice Processing Automation

They verify that the quantity, quality, and condition of the received goods match the specifications mentioned in the purchase order. Any discrepancies, such as missing items or damaged goods, are noted and communicated to the relevant departments for resolution. The purchase order serves as a formal request from the buyer to the supplier, outlining the details of the products or services to be purchased. The goods receipt, on the other hand, confirms the physical receipt of the ordered items and verifies their quantity and condition. Lastly, the supplier invoice provides the financial details, such as the price, terms, and payment due date. At its core, the concept of 3 way match refers to the comparison of three key documents – the purchase order, the goods receipt, and the supplier invoice.

Examine the quantities and items on the purchase order to see that it matches with an order for 750 rubber ducks at $2 each for a total of $1,500. The invoice you receive from the supplier should say the same exact items and dollar amounts on the purchase order. Make your job easier by getting your clients to adopt a three-way matching system for their purchases.