What is three-way-matching in accounts payable

1. What is three-way-matching in accounts payable? All online invoice approvals include some form of matching. Accounts payable three-way matching involves receiving an invoice for the purchase of goods or services, comparing it to a purchase order (two-way matching), and receiving information (three-way matching) to ensure that the details on each document match. We both agree. The concept of three-way matching of accounts payable has been gaining traction since 2011 and continues to be a key activity performed by accounting departments to ensure accurate payments. For verification to be successful, the invoice must have matching allowances. Otherwise, a hold will be placed on your invoice and payment will not be provided until the hold is lifted or resolved. Pending invoices act as a safeguard against mismatched or unconfirmed order payments. When to use three-way matching Three-way matching is laborious and time-consuming because both the supplier and the buyer invest resources to complete the task. In this process, both parties must verify and exchange documents with each other. However, the three-way matching process is an effective business practice for both suppliers and buyers. By obtaining, requiring, and matching all three documents, businesses can ensure a seamless and secure payment process. The invoice matching process simplifies audits. This is because order receipts and supplier invoices are the two standard documents required for an audit. Requiring these two documents before completing a transaction directly helps with the Tax Consulting Agency in Delaware process. Therefore, if the necessary paperwork and resources are available, three-way matching should be used as often as possible (for businesses of all sizes). How does 3-way matching work The three documents essential to managing payments through accounts payable are invoices, order receipts, and purchase orders. Before completion, Accounts Payable processing in Virginia checks the details of each of the three documents to ensure that the products you receive match what you ordered via your order receipt. Below we explain each item and its importance to the matching process.

2. ● Invoice: An invoice, in paper or EDI format, consists of a request for payment from the seller to the buyer. The invoice contains the information needed to drive the sale, including a unique invoice number, seller contact information, applicable credits or discounts, and total payment amount. ● Order Receipt: As proof of payment, your order receipt is included with your item(s) shipped and your payment method upon delivery. ● Purchase Order: A Purchase Order (PO) is a formal confirmation receipt of an order sent from a buyer to a seller. This document is used to authenticate your purchase and includes the Creating PO receipts of supplier invoices in Washington , payment information, a description of the product or service sold, and the quantity. To ensure each order is completed, 3-Way Matching Invoices highlights any discrepancies or discrepancies between the key documents listed above. If a problem or error, such as an incorrect price or damaged product, is identified, payment will be held to adjust the problem and the invoice will be verified through 3-party matching. Example of a three-way match For a detailed explanation of how the process works, see our example using an advertising agency and a laptop. ● An advertising agency needs 20 new laptops for its staff. Once your order is complete, a PO will be sent to your supplier. ● After ordering goods from a supplier, the agency's purchasing department receives an invoice for $10,000. The invoice is based on the PO sent by the buyer to the supplier. ● Your agency's accounting department handles the invoice approval process. During this process, purchasing and accounting departments must verify that the items listed on the invoice match the PO, including each item and PO number. ● After delivering the laptop to the dealership, the receiving department confirms the PO and invoice through the receiving report or receipt. This receipt serves as proof of payment and delivery of the item. ● Another document that may be included in your shipping package is the packing slip. This document shows the details of your parcel,

3. including its contents, order, delivery date, and delivery address. If your laptop is lost or damaged during shipping, our receiving department can consult the packing slip to find a solution. Ultimately, all documents must contain the same information. If all three important documents (PO, invoice, receipt report) match the actual shipment, it is a three-way match. To improve your third-party matching processing, a payment service like Tipalty with end-to-end optimization from order to invoice management is a must! Advantages of 3-way matching The main advantage of the three-party matching process is its focus on eliminating inconsistencies in purchases. they: ● Save time and money One of the benefits of three-way matching is that it helps save companies time and money. Consistency and accuracy of data are essential in all payment processes. False information and duplication can lead to fraudulent supplier invoices and overpayment transactions. With 3-way matching, overpayments and other potential payment issues are immediately flagged by your payments department, even before shipping. ● Strong supplier-buyer relationships Three-way alignment strengthens supplier relationships. Suppliers feel important and valued when required documentation is fulfilled and submitted on time. As a result, they view the company as a trustworthy and trustworthy Business Accountants partner. ● Gratitude is easy Three-way matching also facilitates auditing and bookkeeping. If the documentation is complete and error-free, you should have no problems compiling it. Auditors can easily verify submitted data. Conclusion The three-way matching process is critical to keeping your business financially sound. To stay in business, companies not only need a steady

4. supply of goods/services, but they also need mechanisms to protect against overpayments and financial fraud. For three-way matching to be effective, your AP team must spend a significant amount of time matching and processing invoices. Automating third-party matching for accounts payable reduces labour-intensive verification and matching work for your team and improves the accountability and accuracy of matching. Automate your 3-way matching workflow in minutes with Cflow. The visual form builder allows your accounts payable team to easily set up a three-way matching workflow without any coding.