In Airbase, POs and receipts are synced from NetSuite against an invoice received in Airbase. This straightforward method is commonly used for simple purchases that carry little financial risk. Although it is the fastest process, it may not catch all discrepancies. It will contain the PO number so that it can be matched with the purchase order and receiving report to ensure everything matches the initial agreement. Suppose you run a company that doesn’t have a 3-way match process when buying goods or services.

Step 1: Issuance of the Purchase Order

Such discrepancies should never be resolved at such a time as payments can be placed on hold to assure the financial integrity of the firm. This incident with Google and Facebook magnifies the importance of the PO 3-Way Match system. This is the official document released by the buyer at the time he is contracting himself to 3 way matching accounting pay the seller, who is supplying him with some products or services at agreed prices.

• A system can use fuzzy matching to scan multiple repositories, look up the existing vendor database, and compare various documents to identify fake documents.
• Three-way matching is your key to preventing invoice fraud and overpaying due to invoice errors.
• Thankfully, three-way matching can be done without the manual work through automation.
• By comparing the three documents, PO, invoice and delivery/order information, your business can be confident about issuing a payment.

Step 3: Invoice Receipt and Verification

Since all three documents align perfectly, the transaction is cleared for payment. In this blog, we’ll delve into the intricacies of three-way matching, exploring what it entails and, most importantly, why it holds such a pivotal role in modern accounting and procurement practices. The next step in implementing three-way matching is to set up appropriate internal controls. Implementation of three-way matching is to create a policy that outlines the procedure for matching the three documents.

Implement clear approval workflows

When trying to scale for growth, manual AP processes can Certified Public Accountant be a major deterrent. By migrating to automated matching processes, you can streamline your accounts payable procedures and handle an increased workload without missing a step. As an AP professional, the last thing you want to do is pay a fraudulent or inaccurate invoice.

This method is most commonly used in industries where goods must be inspected for quality or compliance before payment—like manufacturing, construction, or healthcare. Savvy finance departments know there are plenty of vulnerabilities that come with manual invoice matching and processing. From lost invoices to late payments and less-than-stellar payables visibility, manual 3-way invoice matching can put any finance department in jeopardy.

e-Invoicing Portal

Inefficient manual matching leads to payment delays, which strain supplier relationships and damage vendor relationships or disrupt supply chains. The AP team can execute the payment with reduced risk of overpayment or unauthorized spend. Businesses will also be able to save time and money using automated systems. They will not need manual labor to complete the three-way matching process. By giving your vendors access to the portal, they can review the purchase order, invoice, and delivery note. They can make any necessary corrections Insurance Accounting before the invoice is sent for approval.

• Explore the essentials and benefits of three-way matching, from key components to advanced techniques and its impact on financial accuracy and efficiency.
• When an accounts payable team identifies a fraudulent invoice, they stop the company from wasting money on a phony supplier.
• After you compared the purchase order to the goods receipt note, you determined that you did, in fact, request the delivery of ten boxes, and the additional box on the invoice was an error.
• Three-way matching is an essential process for companies to ensure accuracy in payments.
• Each document in the 4-way match plays a specific role in validating a transaction.
• Honda could’ve prevented this with an AI-powered AP system and saved $750,000.
• For example, ML-based anomaly detection can monitor employees’ engagement with the AP process.

Plus, the 3-way matching process can help catch invoice discrepancies. Otherwise, these can result in overpaying or making duplicate payments. Simply put, this straightforward process benefits the business’s bottom line. Verifying the details across three distinct documents helps catch discrepancies that could lead to overpayment and identify fraudulent invoices.

• Moreover, the three-way match process plays a pivotal role in enhancing the reliability of financial forecasting and budgeting.
• The reality is that a lot can go wrong, so it’s essential to have a process to check that your business is never losing money to inaccurate or fraudulent invoices.
• While not every business requires this level of control, it plays a crucial role in high-value, high-risk procurement.
• However, let’s say that instead of 10 boxes of paper, your receiving department only counts 9 boxes of paper.
• With automation, you’ll get all the benefits of three-way invoice matching without the need to devote valuable AP resources to manual matching.
• BILL provides a solution that streamlines the entire payment process, helping you avoid illegitimate invoices and overpayment and save time.

Why Is Automated Invoice Matching Beneficial for Businesses?

This is estimated, never absolute, particularly regarding commercial shipments. If you skip one or two entries or make a wrong one, it will be counted as an error in your three way match accounting. There are several key reasons why business owners are moving to adopt 3-way match in AP. Invoice automation uses tools like OCR which scan Invoice details such as vendor names and amounts. All of the information should be stored in the same system and easily accessible.