Three way matching of invoices
Having budget holders approve invoices based on an automated workflow is commonplace. Incoming invoices can also be automatically validated and approved by matching invoices with associated transaction-related documents. Such as matching invoices with the associated purchase order (PO) and receipt.
This is the typical three way match. Matching can also be done with other documents. Or with payment plans. With less than two sources. Or just with more. Then it can be called a two way match. Or a four way match.
Three waymatching relieves budget holders, reduces invoice processing lead time and is in line with transparent working.
Intelligent matching
Matching between different documents or sources seems like an easy task, but it has a number of challenges:
- With many orders, payment does not follow one invoice, but is spread over installments. It is then obviously important that this is taken into account in the matching procedure.
- In addition to heading level ("the totals"), matching can also be done at the line level. The latter is more technically challenging, but does provide more reliable matching.
- In practice, it happens with regularity that small differences are found between purchase order and invoice. For example, due to rounding. It is then costly to correct these differences, because in almost all cases the supplier has to be contacted. Therefore,tolerance values should be built into the matching procedure where very small differences are condoned.
Invoice processing and matching
In order for the approval process to run smoothly, the quality of the invoice must be guaranteed and a thorough handling must be set up for invoices that do not match.
Invoices can first be automatically validated upon receipt and possibly enriched based on master data from one or more ERP systems. This greatly increases the likelihood of fully automated invoice processing.
In addition, thorough handling for mis-matches should be in place. For example, depending on what a mis-match is based on, an invoice can be automatically returned to the supplier with a statement of the reason.
