3-way matching is a comprehensive process that matches a purchase order (PO) with the goods vendor invoice and receipt note before payment of a given invoice.
In addition, it defines whether you must make the payment entirely or partly. The principal reason for executing a 3-way matching approach is to decrease the possibility of deceitful expenditures.
Nevertheless, it further provides other advantages in your administrative workflow.
Cutting-edge software facilitates supply chain management in the modern workplace, such as automated 3-way matching. Doing this allows for seamless compliance and a repository of electronic records of invoices, purchase orders, and receipts.
This way, you can better streamline the creation of a trial and allocate precise roles in the procure-to-pay process. Hence, it might not be wrong to say executing a 3-way matching system is effortless in any business.
Keep reading to learn everything you need to understand about 3-way matching in a procurement landscape.
In the modern Accounts Payable processing landscape, managers execute diverse processes to control invoice mistakes that might end in excess expenditures or overcharges.
In addition, each type of management in the payment procedure comprises distinct checkpoints along the way to guarantee precision.
While 2-way matching evaluates purchase data against the conclusive invoice, 4-way matching comprises a quality control measure on purchase data input verification.
This is where 3-way matching comes into the picture, serving as a middle ground between 2-and 4-way purchasing.
A 3-way match compares precision in the three documents in the buying transaction process. Moreover, by closely evaluating documentation data like line item, quantity, and unit expenditure, the accounts payable team can guarantee that what is approved for disbursement is correct.
In simpler terms, 3-way matching is the comprehensive procedure of checking goods receipt notes, purchase orders (PO), and the vendor's invoice to limit fraud, save funds, and keep satisfactory documents for the audit trail.
In addition, 3-way matching is generally done before allocating payment to the vendor after delivery. It concentrates on verifying bill by looking at relevant records that demonstrate that:
Ascertaining whether a company ordered and accepted the goods/services and bills claims payment to efficiently decided whether an invoice is fair or dishonest.
Here are the main components of 3-way matching:
Here are some prominent advantages of 3-way matching for your Accounts Payable (AP) automation team.
The 3-way matching procedure is necessary because it comprises every significant step of procurement in the accounts payable workflow, from ordering goods to guaranteeing the delivery of the purchased goods.
It likewise guarantees that the correct amounts of the ordered products are available, accounted for, and in exceptional shape.
In addition, if the costs, amounts, and goods match on all three orders, the entire series of events in the supply chain is finished, and your operations are efficient and precise.
Matching the vendor's bill with the purchase order guarantees that your company only accounts for goods or services it requested.
In addition, a purchase order is made after an approval procedure based on an organizational requirements review. This approach assists in taking away the possibility of arbitrary spending happening.
Furthermore, the goods collection receipt confirms that the requested items were provided in the correct quantity. In some circumstances, the confirmation might extend to documenting the state of the goods when delivered.
A 3-way matching procedure reduces the possibility of unethical workers conspiring with third parties to trick the business. Such an event can readily lead the organization to economic ruin.
The 3-way matching process highlights precision and responsibility since more than one division is involved. If specific inaccuracies are present, you can readily check flagged records to notice which division is most accountable for them.
For instance, if a procurement representative detects inconsistent accounting entries, you can explore the grounds within the purchasing division.
A flawed computer system or a tremendous workload averts your worker from accomplishing satisfactory work. In simpler terms, three-way matching can assist in troubleshooting a backup in the workflow.
Occasionally, a business incurs additional expenditures merely because requested goods have been disbursed more than once.
The 3-way matching procedure restricts that chance by reviewing the order numbers and dates on all the records and guaranteeing that all three formats for each request are accounted for.
For instance, if you miss a shipping order, you must not make the final payment until those goods arrive. The process guarantees the workflow cycle is working in the appropriate arrangement and saves you funds by ensuring the company doesn’t pay for articles it hasn’t obtained.
Another benefit of 3-way matching in your workplace is the ease with which the accounting team can affirm your payments.
When accurate documents are not owned, the accounting division can feel a bit negative when they ask for supporting records for vendor payments. The administration may think like they are being charged with misappropriation.
Nevertheless, having up-to-date documents not only makes the procedure faster but is also a sign of cooperation and transparency in business dealings.
3-way matching is supposed to be one of the most satisfactory accounting systems because it guarantees precision, implements honest business approaches, and confirms that all workflow stages are operating the way they should.
So if you are looking for an automated 3-way matching solution to streamline your procurement, Hubler can be your one-stop destination.
With the automated procurement solutions provided by Hubler, your business can readily make purchase orders, compare them with vendor invoices, and fill out goods receipts.
This way, your team can readily save funds, restrict fraud and always remain compliant with the applicable laws.
Get in touch with us today and see how you can improve your procurement process.