A three-way matchis a procedure involved in matching the data against a particular Purchase Order, a Goods & Receipts Number and an Invoice received from the vendor. Three-way match helps us to avoid paying an incorrect and perhaps fraudulent invoice.
The purpose of a three-way match boils down to three major points
- Avoid Fraudulent Payments – Properly maintaining the Purchase Orders, GRNs, and invoices can provide total control for the finance teams on the business account payables and also ensures that they are not overpaying or paying for duplicate items or invoices. The process also protects against fraudulent or non-authorized purchases. Any discrepancies can be flagged immediately and will be subject to manual review.
- Always Ready For Audit – The most commonly asked documents during the auditing process are the purchase orders, goods, and receipts number, and the invoices. When these documents are correctly approved, matched, and organized, the audit process becomes seamless and won’t take too much employee timeaway from their main focus.
- Strengthening Vendor Relationships – Vendors knows the importance of purchase orders, invoices, and receipts. Frequent mistakes on receipts and invoices may spoil the relationship. A good relationship with a vendor can lead to preferential pricing and improved credit terms.
Most Common Issues Faced In A Three-Way Matching Process
- Finance team ends up spending a huge amount of time to gather all the required documents, match it against each purchase order, GRNs, and invoices resulting in a huge stack of papers.
- It can be difficult to accumulate the required information, and if there are some changes to it then the team will have to get the approval to make any further changes.
- Until the accounts payable team receives the right set of information and documents, they cannot process the payment.
- Delayed payments can annoy vendors, which in turn diminishes the vendor relationship with the organization leading them to lose the preferred customer advantages like receiving discounts, increased credit periods etc.
The Solution
A simple yet most effective solution to all the above issues is to automate the three-way matching process. When a three-way matching process is automated, organizations can automatically match a large number of their invoices. This means that the invoices will run straight through the AP process without any manual intervention, saving employee time and reducing errors.
An accounts payable automation system like Finly, can automate all the account payables of your organization. The intelligent software automatically matches the invoices against each purchase order and GRNs. The data can be processed according to a customized workflow configured as per the organizational terms that send out essential information about each transaction to the right person for approval. The status of all the processed purchase orders, invoices, pending payments, will be available in a single dashboard.
With Finly’s powerful policy engine, you can set up a customized multi-level approval-flow based on the organizational hierarchy. Multiple levels of approval stages can be configured involving various stakeholders to approve the request raised by an employee and be notified via email. The system can also be configured to automate the notification reminder to approve or disapprove any pending requests.
Finly’s robust system will shorten the approval cycle and sends detailed information to the approver. Each purchase order consists of an audit trail helping in deeper understanding. Finance teams can write special notes or even communicate with each other through a LIVE chat system. Any number of invoices can be processed through a one-click approval flow either through email or via mobile devices as well.
