3 way match

Financial processes are suited to automation is because they are rule-based, repetitive, and regimented. The process, a subtask within accounts payable, always reconciles the purchase order, the invoice, and the The Best Guide to Bookkeeping for Nonprofits packing slip before making payment. The supplier invoice has details of what was purchased and other relevant vendor contact details. In one dashboard, manage and match the details of your POs, GRN, and bill.

The buyer fills out a receiving report and sends it to the supplier to verify the delivery of goods. Some teams may be inclined to put off implementing this process because it’s an added step. But the three way match process is not complicated and does not actually require much added time or man-power. Performed correctly, it’s a very smooth procedure that provides huge benefits when weighed against the effort it takes to carry out. Prevent fraud – 3-way matching helps prevent, or reduce the risk of, fraud by preventing payment for purchases that were not authorized or that did not comply with vendor terms. As the name of this accounts payable process suggests, there are three components of a three-way match.

What is 3-way matching and 2-way matching?

A system can automatically follow up with users to check the delivery status. The three documents required for a 3-way match process are Purchase order, Receipts, and Invoices. Let’s look at different stakeholders involved in the 3-way match process, their issues, and how to address them. It is a straightforward Accounting for Lawyers: What to look for in a legal bookkeeper process, but we need to manage the expectation gap and ensure the successful implementation of the 3-way match process. For example, the data must be imported into QuickBooks for the match to happen. If you have siloed systems, you first need to identify the data integration touchpoints.

3 way match

This matching process is crucial for maintaining financial control, preventing overpayments or underpayments, and ensuring transparency. A completed three-way match makes record-keeping easy, as well as making it easier to track payments and keep more accurate records overall. If there are ever discrepancies, or an audit needs to be conducted, it will be easy to look back and verify invoices when documents https://intuit-payroll.org/what-is-the-best-startup-accounting-software/ match. This states the amount and price of goods or services the vendor or supplier is requesting payment for. It is an official document based on the purchase order that includes a unique invoice number and often a scheduled delivery date. As organizations grow and more purchases are made, it naturally becomes harder to keep track of all the important information between buyers and vendors.

Documents Required to Confirm a 3-Way Match

It also helps to prevent duplicate payments and fraudulent activity. When goods arrive, the receiving department must communicate with the accounts payable department and confirm that the correct PO number is on the packing slip. And sometimes, the finance team may need to communicate with the purchasing department to verify vendor invoice details before releasing payment.

3 way match

This document is forwarded to the accounts department once the receiving department has completed their due diligence and recording. By verifying whether a business requested and as well, received the goods/services an invoice claims payment for, it can easily be determined whether an invoice is legitimate or fraudulent. These automated systems are so expensive that they are not a viable solution for smaller businesses. RPA bots can monitor the company’s email for incoming vendor invoices.

Why 3-way matching is important

The essence of three-way matching is to eliminate fraud, and to ensure all incoming invoices are properly vetted before making payments on them. With these three documents in hand, the accounts payable personnel can crosscheck to determine whether a supplier’s invoice is legitimate, before making payment. The “match” part of the three-way match refers to comparing the quantities, price per unit, terms, and other information appearing on the three documents. In other words, does the vendor’s invoice detail agree with the organization’s purchase order, and to the goods actually received as shown on the organization’s receiving report?

3 way match

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