Three-Way Matching

What is Three-Way Matching?

Three-way matching is an accounts payable validation process that verifies a supplier invoice against two corresponding documents: the original purchase order (PO) and the goods or services receipt. The goal is to confirm that what was ordered, what was received, and what is being invoiced are consistent before payment is approved.

The "three ways" refer to these three documents:

• Invoice
• Purchase order
• Receipt

What three-way matching checks

Three-way matching validates the following across all three documents:

• Quantities: Invoice quantities match the PO and receipt quantities.
• Unit prices: Prices match the agreed PO terms.
• Invoice total: The total amount is correct given to the verified line items.

Handling discrepancies

Discrepancies are flagged as exceptions and routed for human review or supplier clarification rather than proceeding to payment. Common exceptions include:

• Price variances above tolerance thresholds
• Quantity mismatches
• Invoices for goods not yet received

How automation enables three-way matching at scale

To ensure a reliable match, the system must accurately capture and compare data from three key documents:

• Purchase orders
• Goods receipt records
• Invoices.

The role of intelligent document processing (IDP)

Intelligent document processing (IDP) provides the extraction accuracy that makes automated three-way matching viable at scale. Key benefits include:

• High straight-through processing (STP) rates in accounts payable workflows
• Maintained controls that prevent payment errors and fraud
• Reliable, automated comparison across all three document types