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Most companies do some form of matching of vendor invoices to purchase orders and/or goods receipts. This is called a 2- or 3-way match.
The process can require a great deal of manual effort, particularly if the invoiced items have to be matched at the line level.
Once an invoice is entered into an ERP it is assigned a “match/no match” status. If for any reason there are price differences or problems with the goods receipt, the invoice cannot be processed by the ERP. Users or knowledge workers typically have to cancel the transaction, and then perform time-consuming manual work to clear the exception. This usually involves the purchaser, the receiver and sometimes the vendor.
ERPs do not have an automated way of handling these exceptions and in many cases companies may spend days trying to clear up the differences between purchase orders and invoices.
Procurement software companies claim they can “automatically match” these documents – but what makes that possible? Accounts payable three-way match.
First, let’s get up to speed:
All of this information is visible in one intuitive, user-friendly dashboard.
Secondly, in most companies accounts payable staff do not have the data or knowledge of the purchase to be able to clear an exception
This is where the manual process slows things down.
Whereas the AP staff member might not have the information at hand, Intelligent 3-Way Match isolates the problem that is preventing a proper match.
Using PO and goods receipt data, Intelligent 3-Way Invoice Matching determines a proper workflow by identifying the purchasing specialist or other knowledge workers who have the authorization to address the exception and delivers them a “package” of information—including an email alert—streamlining the matching of vendor invoices.
Rillion’s AP Automation Suite includes Automated 2 and 3 Way Matching, read more about that here.
Efficient mobile approvals
Once delivered, the recipient views the package of information which includes an invoice image, a copy of the PO, the goods receipt information, and a description of the error. This package of information is presented in a single dashboard on the recipient’s laptop or mobile device. It gives the knowledge worker all the tools and services they need to manage the exception in the 3-way match, such as ad-hoc routing capabilities to colleagues and email and/or portal communications with vendors.
When the knowledge worker is done, they can return the corrected invoice package through the dashboard back to the matching engine, clearing the exception.
As well, all of these steps (including the communications) are tracked and recorded in the accounts payable three-way match, creating an audit trail visible to auditors and regulators.
The non-PO invoice arrives with no accounting data on it, and no PO to assign the account codes from. To handle this, intelligent scanning technology classifies each invoice when it captures the data. It asks the following:
3-Way Match can greatly shorten the payment cycle and improve the productivity of all the users in an organization. See how it fits in with Rillion’s AP Automation solution here
What is 2-way and 3-way matching in accounts payable?
2-way matching refers to the process where an invoice is verified against its corresponding PO (purchase order). When 3-way matching is used, the invoice is verified against its corresponding PO and goods/delivery receipt.
Schedule a consultation with one of our AP experts.