What is two-way matching?
By Tim White · Glossary · Last updated
Two-way matching checks an invoice against its purchase order before payment: same items, same quantities, same prices. If they agree, the invoice is cleared to pay. Three-way matching adds a receiving report to confirm the goods arrived.
When two-way is enough
Use it for services and anything with no delivery to inspect: retainers, software subscriptions, consulting, maintenance contracts. There's nothing to receive against, so the PO and the invoice are the whole story. For physical goods, add the receiving check.
Mistakes that let errors through
Matching only the total. A retainer can be billed at the right amount for the wrong month, or at last year's rate with a discount line that hides the difference. Check the lines and the service period.
Matching against a stale PO. If the contract was amended in March, an April invoice checked against the January PO will fail for the wrong reason or pass for the wrong one. Update the PO when the deal changes.
Common questions
Two-way or three-way?
Three-way for physical goods, two-way for services. Many small teams use both and decide per vendor.
Does two-way matching catch overbilling?
It catches an invoice that charges more than the PO in quantity or price. It can't confirm delivery, since no receiving record is involved.
Sources
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