What is 3-way matching in accounts payable?
By Tim White · Glossary · Last updated
3-way matching is an accounts payable control that compares three documents before an invoice is paid: the purchase order, the receiving report and the invoice. If quantities and prices agree across all three, the invoice is cleared to pay. If they don't, it's held. It exists to stop you paying for goods you didn't order or didn't receive.
The three documents
The purchase order says what you agreed to buy and at what price. The receiving report, or goods received note, says what actually showed up. The invoice says what the vendor wants to be paid. Each one is created by a different person, which is why comparing them catches mistakes.
A worked example
Northwind Timber invoices 500 planks at 4.20, for 2,100.00. The PO authorized 500 planks at 4.00. The receiving report shows 480 arrived. Price is 0.20 over and quantity is 20 short. The match holds the invoice. You pay 480 at 4.00, or 1,920.00, once Northwind sends a credit memo for the difference.
Common exceptions
Most exceptions are ordinary. A partial delivery gets billed in full. A price changed after the PO went out. Freight shows up as a line the PO never mentioned. Small teams usually set a tolerance, such as 2 percent or 50 dollars, below which a mismatch is approved without escalation.
Where good extraction helps
The match is only as reliable as the invoice numbers going into it. A misread quantity creates a false exception or hides a real one. InvoiceJet produces line items with a confidence level and the source text for each, which you export and compare against your PO and receiving records. It doesn't run the match itself.
Common questions
Does InvoiceJet do 3-way matching?
No. It handles the invoice side: checked line items and totals you can export as CSV or JSON, or receive by webhook, and compare against your PO and receiving data.
What's the difference between two-way and three-way matching?
Two-way matching compares the invoice with the purchase order. Three-way adds the receiving report, so it also confirms the goods arrived.
Sources
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