What is the 3 Way Match Process in Accounts Payable?

Cflow from Cavintek is a comprehensive workflow automation solution that provides fully customizable automated workflows for various business functions. Finance workflows like 3-way matching in accounting, invoice approvals, and expense reimbursements can be effectively automated with Cflow. Having a transparent invoice verification process promotes strong vendor relationships. Timely notification of issues during the 3-way match of sales, 3-way match of receiving, 3-way PO match, or 3-way invoice match, ensures that payment to suppliers is done on time. The supplier’s invoice is essentially a request to pay money owed to the supplier. Automating 3-way matching is simple when you upgrade to Planergy’s e-procurement system.

Businesses must ensure their accounts payable (AP) departments verify the legitimacy and accuracy of every invoice they pay. Companies use this reconciliation method to detect fraudulent invoices, embezzlement, computer glitches, or human error. It is no secret that 3-way matching can help prevent overpayments by matching invoice quantity with that ordered and received. But with the help of 3-way matching, you can also prevent duplicate payments https://quick-bookkeeping.net/ and overpayment due to manual errors and gain better negotiating power over vendors by capturing invoice mistakes early. Most companies use two-way invoice matching, which compares the purchase order information to the vendor invoice to check for discrepancies. Many businesses find this to be a good fit for their current processes, especially those that need to pay for services and don’t use a goods receipt note to record these services.

Suppliers and Vendors

As an AP professional, the last thing you want to do is pay a fraudulent or inaccurate invoice. Today, an increasing number of businesses are using 3-way match processing to mitigate this risk and reign in company spending. On the other hand, the three-way process checks the purchase order against the goods receipt note and the supplier invoice.

• The numbers on the packing slip should match those detailed on the invoice and the PO.
• The goods receipt is also matched to ensure the goods specified in the purchase order and invoice were delivered.
• Even while trying to avoid overpaying, firms might frequently incur substantially greater processing expenses when using a manual procedure.
• Accounts Payable approval procedures include two-, three-, and four-way matching; however, the degree to which the matching process is used varies for each version.

Without the necessary PO matching controls, the company would be purging money and not even realize it. Paying invoices without proper verification results in paying far more than the agreed price or paying for more than what you receive or paying multiple times for the same product. The three-way match process provides better internal control over the accounts payable and purchase process.

Automated Three-Way Matching

Essentially, two-way matching doesn’t verify that the product was actually delivered. Three way matching compares line item details and totals across purchase orders (PO), receipts for good, and vendor invoices sent to the customer. Unfortunately, your suppliers won’t take a day off from submitting new invoices or expecting prompt reimbursement for their efforts. Harry initially verifies that the business name and payment details are consistent across the documents, making it unlikely that a rogue fraudster is attempting to misdirect a legitimate payment.

BUSINESS INTELLIGENCE SERVICES

While it’s always an important internal control, the disadvantages of 3-way matching come into play when it’s done manually, rather than automated. When done manually, it can be labor-intensive, time-consuming, and a considerable cost to your organization. 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. Two-, three-, and four-way matching are all accounts payable approval processes—however, each version takes the matching process to a different degree.

Benefit #4: Improves supplier-buyer relationships

By leveraging automated 3-way match, accounting departments can streamline payment processes, mitigate the risk of human error and exchange business documents digitally. Plus, if you run into https://bookkeeping-reviews.com/ any errors during the matching process, you will have to backtrack and start from scratch. By ditching the manual matching and approval workflow, you can rid your AP team of the extra work.

Eliminates Fraud

It provides clear insights into supplies from vendors and money paid to suppliers. Before we go into the working of the 3-way matching process, let us first understand the procure to pay (p2p) process. The https://kelleysbookkeeping.com/ first step in the p2p process is placing the order with the supplier. The purchase order (PO) is the document containing complete information on the goods/services required along with pricing information.

Digital data verification is much faster and more accurate compared to manual matching. The 3-way matching process requires accurate verification and matching of information in the invoice, purchase order, and goods received in the note. Gathering all these documents and verifying the data is a time-consuming process when done manually. As mentioned before, manual data verification is prone to errors and discrepancies.

Way Matching In Accounts Payable: What, Why, And How To Do It

Not only can your employees easily overlook transposed numbers or unintentionally miss process steps, but they also might cause transcription errors on the original documents. 3-way matching in accounts payable (A/P) refers to a validation technique that is used to help confirm that a received invoice is accurate, credible, and should be paid. After all, no business wants to overpay on a purchase or fall victim to fraud, so a cautious, trust-but-verify approach to any request for funds from your suppliers is healthy and should be encouraged.