3-way matching: how does it work and what are the benefits?

Do you regularly need to perform a check between a purchase order, the receipts on it and the invoice you finally received? Then 3-way matching with smart software can help. But how exactly does this work? And how do you benefit from it? In this blog post, we explain.

What is 3-way matching? Case study and process

Suppose a project manager needs to order five front doors for the homes your company is building. The first step is to create a purchase order in the ERP system, after which the project manager places an order with the supplier through the buyer. The latter delivers the front doors to the construction site, at which point the project manager checks that all five have arrived in good order. From then on, you get to work on invoice processing in the financial administration department. If you go through the 3-way matching process manually, you have to start calling around. First, you contact the buyer to ask if they have ordered five doors. Next, you ask the project manager if they received five doors. Finally, you have to put the invoice next to the purchase order and verify that the two documents match. A labor-intensive task that takes a lot of time. Can’t you handle it faster? Absolutely – and you can if you automate the process. Smart OCR software captures at a glance that you ordered and received five doors, what amount was agreed upon and what amount is on the invoice. So you can check three different elements at once. A convenient way of 3-way matching where you don’t have to match individual invoices with purchase orders each time!

How do you make a 3-way match with smart software?

The process begins in your ERP system. There you create a purchase order, which a supervisor may approve so the order can be placed. After you place the order and it arrives, the status in the ERP system changes to “received. The moment you receive the invoice, smart OCR software automatically retrieves the order and receipt(s) to immediately check if they match. If there is a 100% match (or a matched margin is met), the system can automatically book the invoice and make it payable in the ERP system. Does the invoice amount not match the purchase order? In that case, the software provides a signal so you can investigate what went wrong. If necessary, you can ask for advice from a colleague within the system. This communication is logged, so you can review all messages at a later time. Also, all involved can see where an invoice is currently located and why it has not yet been posted or paid. Handy, because that way you maintain an overview at all times!

What are the benefits of automation?

If you work with purchase orders and automate the processing process on the front end, you will have to do a lot less handling in the financial administration. As we explained above, if there is a match, an invoice is booked and paid fully automatically. And if there is no match, the software will alert you immediately. This means you only have to process other types of invoices (such as expense invoices). This allows you to eliminate many repetitive tasks. you therefore work faster and more efficiently, leaving you time for work that is more challenging and that makes you happier!

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