Three-way matching serves as a checks and balances to make sure an invoice is legitimate. Unfortunately, fraud happens, and it’s up to your business to have a system in place to prevent it, internally and externally. There can also be cases where internal fraud occurs. ![]() Other times, it’s a third-party posing as your supplier committing the fraud. People are willing to try and scam businesses out of money. And when you find discrepancies, you can act on them as needed, such as by reaching out to the supplier to correct the price. It also increases visibility, because it is more clear where company money is being spent. When an invoice, PO, and receipt are all compared, it’s much easier to double check your work. With a three-way match, you can confirm that the business’ established purchase approval process was followed. Reason #2: Increases control and visibility It benefits your business by ensuring that the supplier invoice matches your ordered goods or services. By verifying that the purchase order, order receipt, and supplier’s invoice match, you know that an invoice is valid and correct before paying it. At that point the company should already have the PO and proof that an order was received. Here’s how: Reason #1: Verifies ordersįor many companies, receipt of an invoice puts the payment process, and three-way matching, in motion. Why three-way matching is importantĪlthough it may be time-consuming, the three-way matching process can save your business many headaches in the long run. ![]() So, instead of simply paying invoices as they come in, your business cross-references the invoice with two other documents to ensure everything adds up: The purchase order (PO) and the goods receipt.Īccount managers or the billing department look at these documents and verify that the goods or services ordered match the outstanding invoice. It’s used to check whether a supplier invoice should be paid or not. ![]() Three-way invoice matching falls within the accounts payable process. A sophisticated invoice control system using three-way matching could have prevented some of these fraudulent payments, so let’s dive in and find out how it could’ve helped these companies-and how it could help your own. If you see a common theme, that’s because there is one: A lack of invoice verification. That same year, Facebook and Google paid millions for invoices they didn’t incur. An AFP Payments Fraud and Control Survey revealed that 82% of companies were hit with payments fraud in 2019.
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