2-Way vs. 3-Way Matching: What’s the Difference? (2024)

FAQs

2-Way vs. 3-Way Matching: What’s the Difference? ›

What is 2-Way vs. 3-Way Matching in Accounts Payable? 2-way matching in accounts payable makes sure all data on the purchase order and invoice aligns. 3-way matching in accounts payable goes one step further and makes certain the data on the purchase order, invoice and sales receipt are the same.

Three-way matching is an accounts payable process that checks that the details on a purchase order, the supplier's invoice and the delivery receipt match before an invoice is paid. Two-way matching checks only the details of the supplier's invoice against the details of the purchase order.

Step 1: A company receives an invoice from a vendor for the goods/services ordered via the purchase order. Step 2: The invoice is manually stored in the database of the receiving company and matched to the corresponding PO. Step 3: How this step is executed is determined by the so-called tolerance.

In accounting, one of the most common types of invoice matching is called the 3-way match. Three-way match is the process of comparing the purchase order, invoice, and goods receipt to make sure they match, prior to approving the invoice.

One of the primary issues encountered during three-way invoice matching is discrepancies in quantity. This occurs when the quantity of goods or services received does not match the quantity stated on the purchase order or the invoice.

Two-way matching is an automated process that checks for discrepancies between purchase orders and their associated invoices before invoices are approved and paid. Two-way invoicing, also known as purchase order matching or PO matching, compares specific figures on both the purchase order and invoice.

Four-Way Invoice Match

Much like three-way matching, this process needs a purchase order, receipt of goods, and supplier invoice. To make it a four-way, it also requires inspection information. This typically has to do with quantity tolerance.

For most services, 4-way matching is necessary. A 4-way match involves the invoice, purchase order, and receipt. The fourth element required is an inspection or confirmation from an individual who can confirm the terms of the agreement and delivery of the goods or service.

That is, 2-way matching – Purchase orders. 3-way matching – Receives information. 4-way matching – Inspect information.

The 2-way matching process involves matching only the purchase order and invoice. In the case of 3-way matching, the invoice is also matched with the goods receipt note besides the purchase order. In 4-way matching, the goods are further matched with the inspection report.

What is a 3 way match payment? ›

A 3 way matching is the process of matching purchase orders (PO), goods receipt note, and the supplier's invoice to eliminate fraud, save money, and maintain adequate records for the audit trail. 3-way matching is usually done before issuing payment to the supplier post delivery.

Which department performs the 3-way match? As a best practice, the accounts payable department is responsible for handling the three-way match process. In some businesses, purchasing and accounts payable are under one roof.

A 3 way match is an internal control process that cross-references a supplier's invoice against its corresponding purchase order (PO) and good received note (GRN). The goal here is to ensure that financial details (order quantity, order amount, total amount, PO number etc.) match across all 3 documents.

Three-way match is a common accounting control to ensure that payments on purchases made on behalf of your business are received, accurate, and complete. A successful 3-way match includes matching and verifying the purchase order, the invoice, and the barcode of the package before a payment is made.

In accounts payable, three-way matching is an internal control process that ensures invoices, purchase orders, and receiving reports all have consistent line item details.

The 2-way matching process involves matching only the purchase order and invoice. In the case of 3-way matching, the invoice is also matched with the goods receipt note besides the purchase order. In 4-way matching, the goods are further matched with the inspection report.

Before agreeing to pay an invoice from a supplier, the purchase order, goods receipt note, and invoice from the supplier are compared. This standard practice is known as a "three-way match." A three-way match can assist in deciding whether only a portion of the invoice should be paid or the whole amount should be paid.