3-way invoice matching - what it is and how it works
What is 3-way invoice matching?
The process of 3-way invoice matching is simply matching information in a purchase order (PO), a goods received note (GRN), and an invoice. Done manually, it can be quite a lengthy process, which is why many businesses choose to automate 3-way invoice matching to reduce administration time in accounts payable and provide valuable insights into supplier delivery and pricing compliance.
Why use 3-way invoice matching?
3-way invoice matching identifies and highlights any differences between the three sources of information, allowing you to manage invoices by exception, rather than having to go through each individual one – typically the accounts payable team will only really get involved if there are discrepancies, such as a supplier charging an increased price for goods than agreed, or charging for goods that haven’t been delivered.
Accounts payable teams therefore spend less time going through POs, GRNs and invoices, as they only need to focus their time on those that don’t match up. A solid 3-way matching process also allows organisations to be better informed on the performance of their suppliers and manage any discrepancies that may arise.
When automated, this service provides a seamless management of purchases and invoices, removing all the usual manual steps between ordering and payment of goods purchased, saving a lot of man-hours in the process, not just for the customer, but the supplier as well. With the right tools in place, you can even set up automatic credit notes to be sent out if you’ve been overcharged.
Other benefits that 3-way invoice matching provides are the creation of a better customer-supplier relationship due to an increased speed in invoice payment, and better visibility of who your best suppliers are – typically those who deliver what they say they will and invoice the correct amount.
At Fourth we’ve always seen the importance of automated 3-way invoice matching: we’ve worked with both suppliers and customers to set up a unique solution which integrates seamlessly with our inventory management software, updating in real-time when goods have been received. Our solution also has the ability to adopt many suppliers into a 3-way matching processes, even if they are not capable of submitting typical electronic documents.
If you would like to find out more about setting up automated 3-way invoice matching in your organisation, get in contact.