Or if the quantity is off invoice matching by less than a certain number of units (like 10). You may receive invoices from various suppliers in different formats, such as PDFs, scanned images, spreadsheets, and XML. This lack of standardization occurs because each supplier has their own invoicing system and preferences. Your AP team ends up having to manually process and consolidate the data.

Use Cases of Automated Invoice Processing

• This matching type ensures that your company is billed accurately for the goods and services you receive.
• Collectively, these challenges significantly affect the efficiency and effectiveness of the invoice matching process.
• Whether it’s a 2way match, 3way match or 4way match, each approach serves as a safeguard, ensuring that only accurate and authorized payments are processed.
• Allowing a deviation of just 50 cents can make a big difference in the volume of invoice exceptions needing manual treatment.
• It provides a higher assurance that the invoice matches what was ordered and received, and it helps to catch discrepancies related to deliveries.
• Two of the most common deviations are the price deviation and the quantity deviation.

The advantages and potential challenges of implementing 4-way matching deserve careful consideration when determining whether it’s right for your business. While 2-way matching is a quick and cost-effective solution for invoice validation, 3-way matching offers enhanced validation and control by incorporating the receipt. To fully understand the significance of invoice matching, let’s explore why businesses https://www.bookstime.com/articles/salaries-and-wages should prioritize implementing this process and how it benefits their financial health.

Fraud and theft risks

Seamless https://kalieleon.gr/grant-writing-for-small-business-a-step-by-step/ integration of vendor ledgers, purchase orders, and goods receipts between automation solutions and ERP systems is crucial for successful automated 3-way matching. Sometimes the mistake can be due to the supplier’s invoice and not your process. There can be mistakes, such as missing the invoice number, an unordered items list, or the totals not adding up. When key details are missing in the invoice, matching becomes a hectic task. If you’re still matching documents manually – comparing spreadsheets, PDFs, and printed papers – you already know how time-consuming (and error-prone) it can be.

Compliance

The vendor would offer a 2% discount if the invoice is paid within 15 days. By matching the document electronically, you keep an online record of how the document was matched and issues were resolved (if any). With a tolerance engine, you can set a tolerance so the system ignores this exception while matching. With the added tax, the total invoice amount is always greater than the purchase order amount. The Invoice-matching engine should be able to handle the following scenarios. They can then create an invoice by simply flipping the purchase order to an invoice and attaching a copy of the invoice.

The invoice was entered into the system once the tolerance levels were met. Confirm you’re getting your volume discounts, early payment discounts, or any special rates you negotiated. Patient safety depends on the integrity of medical products, making thorough inspection absolutely essential.

Price Discrepancies:

If you’ve got a fixed-rate contract with a carrier for regular routes, two-way invoice matching gets the job done quickly. You’re not dealing with variables like damaged goods or partial deliveries. It specifies what the buyer agreed to purchase, including product details, quantity, unit cost, and delivery terms. This becomes the baseline against which the rest of the documents are checked. Request a demo with us and we will show you how to eliminate the biggest bottleneck and risk to a fast, accurate global financial close with an integrated intercompany accounting process.

But sometimes it can be difficult to decide whether 2-way vs. 3-way matching is best for your business. Timely and accurate payments foster stronger relationships with suppliers, leading to better terms, discounts, and improved overall supply chain management. This can also lead to better pricing and service from vendors in the long run. When a vendor sends the invoice, it mentions the quantity they are invoicing for. You are confirming the following by comparing the unit quantity across purchase orders, receipts, and invoices. This ensures that purchase orders, invoices, and payments are always aligned, providing real-time financial visibility.