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3-Way Matching Invoices

3 Way Matching Invoices

What is 3-Way Matching?

3-way matching is a payment verification method for ensuring goods are ordered, delivered as per order, and invoiced as per delivered.

3-way matching occurs when a purchase order (PO), a goods received note (GRN) and an invoice are checked against each other and confirmation of what was delivered shown on the GRN, matches what was ordered on the PO, and that the prices, volumes, and PO number on the invoice match the details on the original order (PO).

The 3-way matching basic elements are:

1. Purchase order (PO)

A document with details of goods or services required, volume, agreed price and delivery address, created in line with the business rules of the purchaser and approved by the relevant departments/authority. Once a PO is received by the supplier, the purchaser is committed to the purchase and is liable for the goods once delivery is completed.

2. Goods received note (GRN)

A signed goods received note (GRN) acts as confirmation that goods have been delivered. It lists goods or services delivered, volumes, delivery address and date. It is confirmation that the agreement, or contract, between supplier and purchaser has been completed.

3. Invoice

An invoice is a legally-binding document that a supplier sends to the buyer after the goods or services have been provided. It lists the goods or services supplied, the purchase order number or reference, invoice number and invoice date, including the total amount and any necessary taxes, and the payment terms according to the agreed T&Cs.

 

Key Benefits of 3-Way Matching

Security

Eliminates Fraud

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Accurate tracking of supplies

Growth

Saving Costs / increasing profits

Checklist

Auditing

Eliminates Fraud

Purchase orders are created in line with business rules, and many companies have a No PO No Pay policy. They follow an approval process to ensure business need, approved supplier, and budget allowance. Matching an approved purchase order with a GRN and invoice prevents paying for undelivered goods/services and minimizes unethical employees colluding with suppliers for fraudulent gain.

Accurate tracking of supplies

Knowledge of goods ordered, delivery & settlement dates makes it easy to see what has been delivered, and paid for. If there is a dispute over an invoice having this transparency makes it easier if it comes to litigation.

Saving Costs/increasing profits

It is easier to keep track of goods ordered, price differences for the same goods from multiple suppliers, late deliveries, part shipments etc enabling the procurement team to be more agile with ordering and more effective at cost saving.

Auditing

When auditors require supporting documents for payments, having the GRN and PO available to back up the payments made not only makes the process quicker and provides full visibility of the audit trail but also shows transparency.

 

AP Automation Solutions

Documation has a full AP Automation Solution that automates 3-way matching to give your team time for more value-added tasks. You can download our datasheet or find out how our solution can help you with your automated invoice processing including by getting in touch with our listening team

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Automating 3-Way Matching

A manual, paper based 3-way matching process managed by humans is slow and time consuming. It requires input from the goods in department, procurement team and accounts payable. It often involves multiple approvals, paper documents travelling around the business, and time consuming data input, often multiple times. All these elements lead to errors that ultimately cause delays in paying suppliers.

Automating 3-way matching means:

Saving employee time

 

No more manual verification of detail, often time consuming line detail, on GRN/PO/Invoice leading to human error. Automation means quick accurate matching with match exceptions routed to the relevant department and flagged for manual matching.

Improving Supplier relations

 

Automated 3-way matching can happen within minutes of an invoice arriving at the business allowing suppliers to get paid on time. Workflows give full visibility of the invoice, match discrepancies and where the invoice is in the business process.

Protect against fraud

 

The automated 3-way matching process means all orders must have a PO and a GRN, POs are created within business rules and are authorised outside of the AP team, giving segregation of duties at source, and helps to eliminate internal fraud. Invoices for goods that have never been delivered will not slip through for payment, meaning no speculative fraud attempts.

Audit Ready

 

Automated 3-way matching has all documents available digitally, and therefore will not hold up your AP team when the auditors request supporting documentation for payments made. Full audit trails and visibility of orders, goods received and invoices are available at any time.

Early payment Discounts

 

Being able to process invoices for payment within minutes of arrival opens up opportunities to negotiate early payment discounts

No more duplicate payments

 

Duplicate invoices are rejected on arrival and never added to the system for payment.

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More Questions?

Invoice matching solutions can greatly improve productivity and cash flow. Purchase order processing can be simplified with a fully automated solution, using invoice matching software.

AI in accounts payable can eradicate the need for paper invoices and manual processes!

Documation can provide a solution to almost any information management or document processing challenge. Contact us now to find out how we can help.

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