Three-way matching
Three-way matching is an accounts payable control that compares a supplier invoice with the purchase order and the goods receipt, and approves the invoice for payment only when all three agree on item, quantity and price.
The three documents
- Purchase order. What you agreed to buy: items, quantities and prices.
- Goods receipt. What actually arrived, recorded by the warehouse or receiving team.
- Supplier invoice. What the supplier is asking you to pay for.
An invoice passes when it bills the items that were ordered, in a quantity no greater than what was received, at the price on the purchase order.
Two-way and four-way matching
Two-way matching compares only the invoice and the purchase order. It suits services and other purchases with no physical receipt. Four-way matching adds an inspection or acceptance record, for goods that have to pass a quality check before they are paid for.
Where it breaks down
The comparison is simple. The work is in the lines that do not match:
- Price variance. The invoice price differs from the purchase order price.
- Quantity variance. The supplier bills more than was received, often because of a partial shipment.
- Missing receipt. The invoice arrives before the goods are booked in.
- Units that disagree. The order is in cases and the invoice is in each.
- Charges not on the order. Freight, surcharges or tax lines with no purchase order line to match.
Most teams set a tolerance, such as a small percentage or amount, below which a variance is accepted without review. Anything outside the tolerance needs a person who knows whether the order or the invoice is wrong.
How Runtara handles it
In a Runtara invoice workflow, a model step reads the fields and line items from the invoice, and each line is checked against the purchase order and goods receipt in your ERP. Lines that match carry on under the rules agreed for the workflow. A variance is held for a person, who sees the document, the ERP record and the difference side by side. Nothing is posted while it waits, and the approved values are then written to the ERP with the decision and who made it kept on the run.