Three-way match
Three-way match is a verification process that compares the purchase order, receiving documentation, and supplier invoice to ensure they agree before authorizing payment. This control prevents paying for goods not ordered, not received, or priced incorrectly. All three documents must align within defined tolerances for payment to proceed.
Examples
Successful match: A PO specifies 100 units at $50 each. The receiving record confirms 100 units received. The invoice charges for 100 units at $50 each, totaling $5,000. All three match, and payment is approved.
Quantity discrepancy: PO shows 100 units, receiving shows 95 units received, invoice shows 100 units. The mismatch requires resolution before payment: either adjusting the invoice for actual receipt or investigating the missing units.
Price discrepancy: PO price is $50, but invoice shows $52. The match fails, requiring investigation of whether the price changed (and PO should be updated) or the invoice is incorrect.
Definition
Three-way match prevents common payment errors: paying for items not ordered (no matching PO), paying for goods not received (no receiving confirmation), and paying incorrect amounts (price or quantity discrepancies).
Tolerance settings determine how precisely documents must match. Zero tolerance requires exact matches. Percentage or dollar tolerances allow minor variances to pass automatically while flagging significant discrepancies. Setting appropriate tolerances balances control with processing efficiency.
Match exceptions require investigation and resolution. The accounts payable team coordinates with procurement and receiving to determine whether to adjust documents, request invoice correction, or approve the variance. Clear exception handling processes prevent payment delays.
Technology enables efficient matching. ERP systems automate three-way match comparison, flagging exceptions for human review. Advanced systems use optical character recognition and machine learning to improve matching accuracy and reduce manual effort.
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