Consider a scenario where you, as a finance manager, are validating payments against invoices and observe that around 40% of the costs were for things you never ordered, received, or utilized.
What will be the first thought that comes to your mind?
You’ll surely be thinking of a seamless process that compares all the essential elements of accounts payable.
That process is none other than 3-way matching accounts payable. It compares three major elements below-
- Purchase order
- Good receipt note
- Invoice from the supplier
Look at the Infographic below for clarity.
Every year, many giant organizations become victims of these unreliable and fraudulent practices. In such a scenario, 3-way matching accounts payable works as an effective solution by futureproofing your profit and giving you financial success.
Let’s first examine the effectiveness of accounts payable processes that positively transform your business.
How Efficient Accounts Payable Can Accelerate Your Business Success?
A growing business means more vendor transactions, more invoices, and undoubtedly more purchase orders.
But does that really have to mean more manual effort to handle them?
Not at all. Manual efforts are meant for strategic tasks and not for repetitive tasks.
Therefore, we can replace manual efforts with efficient accounts payable services so that every transaction turns out to be valid, authentic, and accurate. Additionally, reliable services help you-
- Strengthen vendor trust
- Improve transparency
- Enable better cash flow visibility
3-Way Matching Accounts Payable Ensures Payment Verification
The 3-way matching accounts payable is a process where businesses can match-
- What was ordered- to check order accuracy and quantity verification
- What was received- to check delivery accuracy and receipt confirmation
- What was billed- to check pricing consistency, payment authorization, and expense allocation.
When all three elements align perfectly, it confirms that payments are made only for products or services received.
This verification process ensures that every dollar spent is trackable and accountable.
Cash Flow, Trust, & Data in Sync
When three-way matching is combined with effective accounts payable services, your business will experience more financial stability and growth. It will include-
Strengthened Control on Cash Flow
Once invoices from suppliers are validated with PO and receipts, you can confidently make payments, as every transaction will be legitimate.
This maintains liquidity, ensures accurate payments, and protects your funds for strategic business initiatives.
Boosted Vendor Relationships
Timely and consistent payments boost suppliers’ trust in you. When you try to pay as per the schedule and invoices, vendors will-
- Provide better terms
- Favor your orders
- Considers you for long-term partnership
Stronger Audit Readiness
Maintaining accuracy in records, invoices, and receipts is a common problem businesses encounter.
The reason is that they lack one crucial factor- Accurate financial data.
The truth is that reliable financial data makes your audit less stressful and insight-backed.
Results?
Businesses can make strategic and informed decisions.
Businesses can offer documentation and proof of compliance.
Your business is meant to be successful when choices are future-focused. Explore both 2-way and 3 way invoice matching processes, and then decide which method suits you better.
3-Way Matching vs. 2-Way Matching- Which is Right for Your Business?
In a crowded market like this, every payment matters.
Accounts payable can turn overpayments into accurate payments, fraud into reliability, and strained vendor relationships into long-term partnerships.
That’s why selecting the right invoice matching process is a short-term finance decision but a long-term business strategy.
2-Way Matching- Quick, Easy, & Affordable
In the 2-way matching process, the purchase order is compared with the invoice to confirm that you’re accurately billed.
It is suitable for businesses that aim for
Quick processing- It helps with everyday purchases to get approval quickly.
Lean operations- It takes fewer resources, making it suitable for smaller teams.
Cost efficiency- It protects money and time with transparent processes.
Ultimately, two-way matching is more suitable for digital services, SaaS subscriptions, or recurring low-value purchases.
3-Way Matching Accounts Payable- Full Control & Full Visibility
In the 3 way invoice matching, the Goods Receipt Note (GRN) is added to the PO and invoice comparison to confirm that you received exactly what you ordered.
Why competitive businesses go for 3 way invoice matching –
Payments only for what you actually receive
Bottom line gets protection with an additional verification step
Relationships with suppliers get better and stronger
Financial review becomes stress-free as you are completely compliant
Three-way matching in accounts payable is suitable for expensive orders, bulk shipments, and businesses with strict financial controls.
The Limited Support of 2-way Matching
The process is faster, but it can affect your business by
Paying for services not yet received
Minimal support for fraudulent invoices
Basic coverage for audits or regulatory checks
For greater clarity between 2-way and 3-way matches, refer to the table below.
A screenshot of a match box
AI-generated content may be incorrect.
Why It Makes Business Sense to Outsource 3-way Matching Accounts Payable?
Outsourcing 3-way matching accounts payable to a reliable provider, or a managed-services model, can bring more advantages than you think.
See the strategic benefits-
Cost Efficiency
The manual matching process can be labor-intensive. It includes factors like
Retrieving documents
Comparing line-items
Handling exceptions and disputes
In addition to this, the process can even increase the cost, may create backlogs, or delay payments.
Outsourcing 3-way Matching Accounts Payable = Expertise + Best Workflow Practices
Results?
You get improved cash flow with early payment discounts from suppliers.
You can pay the provider per invoice, per transaction, and based on workloads.
Scalability
When transaction volume, regional spread, or supplier base grows, your matching process should adapt to the respective changes.
With this in mind, the outsourced provider assesses your current processes, infrastructure, automation, workflows, and plans for handling high volumes and variations. Additionally-
Experts handle surges, seasonal trends, and cross-border flows more easily than building internally every time.
Experts adjust workload level without the tension of searching, recruiting, or training employees.
Results? You get enough time to invest in strategic finance/procurement work rather than paper-pushing.
Stronger Risk Controls
Fraud-proof invoices can protect your revenue. In the purchase-to-pay process, invoice fraud includes-
Payment-related errors
Accidental double payment
Compliance gaps
In such a scenario, an outsourced partner helps you scale operations effectively. They offer you-
Built-in controls + Dedicated expertise + Segregation of duties + Audit-ready records
Experts confirm that the invoice is associated with a validated purchase order.
Experts follow best practices, modern technology, and layered controls to handle the whole process.
Compared to internal teams, the 3-way matching services provide more for less price.
Compliance and Audit-readiness
Who doesn’t want a disciplined matching process?
Everyone wants. Well-defined processes help you get an accurate, documented audit trail. Outsourcing helps you with
Documented workflows
Standardized format
Digital records
A centralized repository
See the powerful benefits that outsourced 3-way matching accounts payable services provide.
Additionally, you get clear transparency into-
Internal check + External check + Regulatory compliance + Business associates
Experts analyze changing regulations related to payments, procurement, and vendor management. With a strong matching process, they meet regulatory requirements effectively.
Experts offer you robust documentation and proof of controls to enhance reputation and save operational integrity.
In the end, while selecting your 3-way PO matching partner, evaluate their track record in invoice matching, confidential records management, integration with ERP/PO system, SLAs, and analytics/reporting.
Beyond this, you must discuss effective matching practices with your solution partner for better results and clarity. Like-
Setting clear matching tolerances so that minor pricing differences or tiny quantity differences should not affect the smooth payment workflows.
When PO, receipt, and invoice are misaligned, get clarity on the processes, like- who notices the mismatch? who investigates the cause, who approves corrections, or holds payment? what steps will be taken?
Clarity on collaboration between procurement, AP team, receiving/warehouse, and the outsourced provider, as successful matching relies on upstream processes.
Track metrics like invoice processing time, volume of exceptions, percentage matched invoices, duplicate payments prevention, and cost per invoice.
Look into access control, data security, and others when outsourcing sensitive financial/vendor data.
Pro Tip- First consider, then discuss, and finally decide on whether you need full outsourcing or a hybrid setup for your business.
Case Study- How an Advertising Agency Monitored Every Transaction with 3-Way Matching?
A well-known advertising firm used to purchase products and services, like office & IT equipment, creative & design tools, and marketing & advertising services.
Challenges-
Before adopting 3-way matching accounts payable, the finance team at the advertising agency faced below challenges-
They were facing additional payments, delayed approvals, and inefficiencies while validating invoices against purchase orders and delivery receipts.
They were facing compliance risks, inefficient record-keeping, and bad planning for strategic initiatives. This happens due to a lack of real-time visibility into cash flows.
Most importantly, failed or irregular payments led to unsatisfied vendors and strained business relationships.
Solution-
To take the situation under control, the agency collaborated with outsourced accounts payable services. And followed a 3 way PO matching process, ensuring every payment is verified against three crucial documents.
Purchase order (PO), the invoice, and the receiving report or goods receipt.
Implementation-
The actual implementation began when the agency ordered 20 new computer systems for office use.
Extended purchasing team- Provider generated a PO specifying prices, quantities, and delivery terms.
Extended accounting team- After collecting an invoice of $10000, the outsourcing provider validated whether the invoice matched the purchase order in detail.
Extended receiving team- Provider granularly checked the computer systems and created a receiving report, serving as proof of delivery.
Additionally, to resolve discrepancies like broken, damaged products, the outsourced team looked into other factors like-
Delivery date
Delivery address
Accessories provided
The last but most crucial step was 3-way matching in accounts payable.
The outsourced AP team approved the payment after aligning the PO, invoice, and receiving report perfectly.
The above aggressive yet essential verification process confirmed that the agency paid only for systems that had actually been received.
Results-
After implementing the 3-way matching process, the agency observed these benefits-
They observed reduced errors in billing and delivery. As a result, no need for corrections and rechecking overpayments.
They observed reduced approval time, empowering consistent payments and vendor relationships.
They observed improved visibility in transactions, allowing the finance team to predict expenses, manage cash flow, and allocate resources efficiently.
Finally, with the help of an expert provider, the advertising agency gained full control over every transaction after integrating 3-way matching into accounts payable workflows.
This case study shows how implementing a verification process with a reliable service provider empowers financial accuracy, transparency, and unlimited benefits.
Thinking about the best partners in the market. The pointer below is enough to convince you.
Why is Integrative Systems a Right 3-Way Matching Accounts Payable Service Provider?
When can financial success be achieved?
When you have clarity into every dollar used, earned, or paid.
When your finances are so accurate, in control, and well-managed that you spend less or no time on discussing errors or discrepancies.
When every finance team member is on the same page about each transaction made.
We, Integrative Systems, believe that nothing is impossible when you have the right plans, robust strategies, and future-proofing abilities.
We help businesses futureproof every aspect of their business. When it comes to accounts payable services, we have a solid process- 3-way Matching.
Our 3-way matching in accounts payable and vendor management services includes-
3-way & 2-way invoice matching services and payment release
Payment processing of PO & Non-PO invoices
Payments- manual payments, prepayments, check payments, check void and reissue, wire payments, ACH payments
Managing vendor accounts and resolving queries
Manual clearing of invoices & payments
Supplier support via calls & emails
Vendor maintenance -new vendor creation, address change, ACH setup, change in banking details, reactivation, vendor merge/factor relationship, vendor verification.
Month-end activities – accruals & provision
Vendor debit balance working -preparing debit balance letter.
Requesting refunds, resolving queries related to the Dr balance, and sending warnings for collection letters.
Vendor account settlement
Chargebacks & credits
Credit memo processing
Credit reconciling
Chargebacks adjustment
Additionally, Integrative Systems provides detailed accounts payable and accounts receivable services to optimize financial processes, boost cash flow management, and strengthen customer and vendor relationships.
We have over 15 years of experience in tailoring solutions around-
Invoice processing
Vendor management
Payment scheduling
Reconciliation
Fraud detection
Compliance support
With our customer-centric approach, you can achieve financial success and concentrate on major business goals.
Boost your finances with our all-inclusive accounts payable, receivable, reconciliation, and vendor management services. contact@integrativesystems.com, and we will contact you within 2 working days.
Frequently Asked Questions about 3 way Matching Accounts Payable
1. What is the 3-way match process?
Ans – A 3-way match is a process where three documents are compared, including the Purchase Order, goods receipt, and invoice, before paying. This process aims to confirm that payments are accurate and error-free.
2. Who will go for 3 way matching in accounts payable?
Ans – The AP team or accounts payable team generally compares three crucial documents. It includes PO, the invoice, and the receipt. The 3-way matching process is significant in ensuring accurate payments.
3. What are the benefits of 3 way matching in accounts payable?
Ans – 3-way matching has various benefits, including strengthening financial stability, future-proofing revenue protection, enhancing audit and compliance, and boosting cash flow.
4. What is the main goal for a three-way match?
Ans – The major goal of 3-way matching is nothing but safeguard businesses through invoice validation and verification of payments. It fixes possible mismatches on bills and orders before payments are processed.
5. What is 2-way and 3-way matching in accounts payable?
Ans – A 2-way match validates the invoice volume and cost with the PO and cost. A 3-way match adds one more layer to the verification process. The third step is checking the receipt from the supplier. It confirms the company receives the same number ordered and invoiced.
