Glossary
What is 3-way matching in accounts payable?
By Tim White · Last updated
3-way matching is an accounts-payable control that compares three documents before an invoice is paid: the invoice, the purchase order that authorized the spend, and the receiving report that confirms what was delivered. When all three agree on quantity and price, the invoice is cleared to pay. It exists to stop overbilling and payment for goods never received.
The three documents
Each document answers a different question:
- Purchase order: what did we agree to buy, and at what price?
- Receiving report: what was delivered?
- Invoice: what is the vendor billing us for?
Why extraction quality matters here
3-way matching is only as reliable as the numbers you feed it. If the invoice total or a line-item quantity is mis-read, the match is meaningless. Verified extraction, where the invoice fields carry a confidence level and cite their source, gives the match trustworthy inputs to compare against your purchase order and receiving data.
A worked example
Say Northwind Timber sends an invoice for 500 planks at 4.20 each, 2,100 in total. The purchase order authorized 500 planks at 4.00. The receiving report shows 480 arrived. Two of the three documents disagree: the price is 0.20 over, and 20 planks are short. A 3-way match holds the invoice instead of releasing 2,100. You pay 480 at the agreed 4.00, or 1,920, once the vendor issues a credit for the rest.
Common questions
Does InvoiceJet do 3-way matching?
InvoiceJet's job is the first document in the match: it turns the invoice into verified, structured line items and totals you can trust, so your matching process compares against accurate numbers. Export or webhooks push that data into your workflow.
What is a three-way match exception?
A three-way match exception is any mismatch among the invoice, purchase order, and receiving report, such as a billed quantity above what was received or a price higher than the PO. The invoice is held for review instead of being cleared to pay.
What is the difference between two-way and three-way matching?
Two-way matching compares only the invoice and the purchase order. Three-way matching adds the receiving report, so it also confirms the goods actually arrived before payment is released.
Sources
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