Automation not only expedites payment processing but also enhances visibility, allowing stakeholders to monitor transactions in real-time and address issues quickly. The scalability of automated solutions accommodates growing business needs, while streamlined communication with vendors fosters stronger relationships. Additionally, the integration of these automated processes with ERP and accounting systems ensures data consistency and accuracy across the organization. Accurate 3-way matching prevents overpayments and errors in financial transactions. By ensuring that businesses only pay for what they have received at the agreed-upon prices, the 3-way matching process contributes to cost savings and ultimately increases profits.
If any of the 3 documents fail to match, the invoice payment is put on hold until the discrepancy is resolved. The 3-way match process in accounts payable can be used in SAP, ERP, and Odoo implementations. The 3-way match of purchase orders in SAP enables efficient data processing and invoice verification. The automated system for the Receiving Department may be slightly more labor intensive. The Receivers will still need to verify the contents of packages against what’s printed on the packing slip.
Benefits of 3 way matching
This reduces the work on the AP piece when they enter the invoice into the system for payment. Interdepartmentally shared databases and advanced implementation of controls make it more important than ever to safeguard against errors in payments and accounting reports. The management of the data and the platform upon which that data rests change. Most of the work is done electronically and all relevant departments and parties are given access to their piece of the purchasing, receiving and invoicing processes. It’s a good idea for the person doing the receiving to make notations directly onto the packing slip, of missing or damaged items. The packing slip should be marked with the date the items were received and by whom.
- If this three-way match reveals that the supplier invoice is in good order, then the accounts payable staff processes the invoice for payment.
- All the information on all three documents needs to match for the invoice amount to be paid.
- While AP automation saves businesses thousands of dollars on manual approval process costs, that’s not the only benefit to automation.
- With the right tools and a little bit of practice, matching invoices can be a breeze.
- The Goods Receipt Note is forwarded to the accounts department after the receiving officer has done the due diligence.
The General Ledger account codes are entered with the line items on the invoice so that the organization can manage budgets and see where money is being spent. The PO number must also be referenced on the invoice once the items are shipped. The physical copy of the PO form gets routed to the Accounts Payable department to be filed and later matched to the invoice. Process improvement and efficiency leads to better time management and overall cost savings for an organization. Successful businesses find and implement ways to save time and money in order to further their growth and development.
When there are discrepancies, you can lose track of funds, overvalue your real cash position, or undermine general decision-making throughout the business. However, employing a 3-way match system in your accounts payable efforts can help your company avoid the following issues. Tracking cash flow accurately both inside and outside the business is indispensable for the audit process.
Pain points in manual 3 way matching
Preventing fraud, detecting overpayment, and managing purchases is an important part of small, mid-size and large corporations that invoice matching can help solve. Most AP automation software, like Nanonets, can help organizations switch from manual 3 way matching to a completely touchless automated workflow. AP teams across enterprises use Nanonets to build end-to-end automated accounts payable workflows. Automated 3 way matching software operate on preset rules/workflows based on tolerance levels and approvals. They quickly flag errors and potential cases of fraud so that AP teams can take immediate action.
With a three-way match, you can confirm that the business’ established purchase approval process was followed. When an invoice, PO, and receipt are all compared, it’s much easier to double check your work. It also increases visibility, because it is more clear where company money is being spent.
XpresSpa: Vendor compliance and cost savings
Smaller organizations are even more susceptible to invoice scams than larger organizations. The three-way matching process can eliminate the payment of fraudulent invoices. A fraudulent invoice won’t have a corresponding purchase order or order receipt. Because the process requires three documents to be compared before payment can be issued, a fraudulent invoice will be detected immediately.
What Precisely is a 3-Way Match Process in Accounts Payable?
Upon delivery of the purchase, the receiving department completes an order receipt, indicating the items received and the quantity of each. Your AP team will verify the PO number, supplier, items delivered, and quantity received against the purchase order and invoice as part of the three-way matching process. Manual matching of thousands of supporting documents can be time-consuming, expensive and extremely labor-intensive. AP teams end up spending lots of man-hours manually hunting for every invoice, PO and receipt!
On top of this organization, MHC’s NorthStar supports straight-through processing. That way, employees only look at problematic documents or high-value invoices, i.e., the ones that are most in need of their attention. An automated routing system ensures that each document has gone through all of the proper channels before the matching process begins.
Receiving high-quality goods and services is vital for improving your business. If you don’t get the materials or other goods or services you paid for, your business will suffer one way or another, whether it’s through defective products or impaired internal processes. The request is in the form of an approved PO containing the quantities of goods or services needed, the required delivery date, and other details necessary for the supplier to fulfill the order.
The three-way match takes the information considered in a two-way match and adds the receiving report. With this type of processing, your team must exchange more information with the vendor to make an informed decision. By verifying what was received from the vendor, the buyer can either approve the invoice as submitted or negotiate discounts related to variances. With Kofax AP Automation solutions, you can not only fully automate the invoice capture process but also create custom validation rules and make matches smoothly up to a four-way match.
Build fully-customizable, no code process workflows in a jiffy.
AP had trouble keeping track of suppliers, and they spent days on invoicing. Using the Order.co Chrome Extension, the team could shop anywhere, check out across vendors, and consolidate their invoices. Zerocater now has a much more efficient system, with 50x fewer invoices, freeing up their time to focus on what they do best.
The benefits of implementing an automated solution range from increased efficiency and accuracy to substantial cost savings and improved compliance. Implementing a 3-way matching system is crucial for businesses to mitigate fraudulent activities. By cross-verifying PO, GRN, and invoice, companies can detect discrepancies or unauthorized transactions, creating 25 disruptive brands that changed the world you live in a robust defense against fraudulent practices. The goods receipt note is a record confirming that the receiving officer has accepted the goods delivered by the supplier. It outlines the received quantity, the condition upon delivery, and other details. Once completed by the receiving department, this document is forwarded to the accounts department.