Three-way match
Checking a supplier invoice against the purchase order and the goods received note before paying it.
In short
- Purchase order: what was agreed. Receipt: what arrived. Invoice: what is billed. All three must agree.
- Differences within a set tolerance clear automatically; larger ones become exceptions.
- For services with nothing to receive, a two-way match against the order is usually enough.
A three-way match compares three documents before an invoice is paid: the purchase order, which records what was agreed; the goods received note, which records what actually arrived; and the supplier invoice, which records what is being billed. If they agree on items, quantities and prices within tolerance, the invoice can be approved without further review.
What each comparison proves
- Order to invoice: the price and terms billed are the ones agreed.
- Receipt to invoice: the quantity billed was delivered.
- Order to receipt: what was delivered was actually ordered.
Remove any one and a specific error becomes possible: paying for goods that never arrived, paying for a delivery nobody ordered, or paying a price nobody agreed to.
Tolerances
Exact matches are rare. Freight, rounding and small price changes create differences. Most businesses set tolerances, such as 2% or $50, whichever is lower, so small variances clear and only meaningful ones are held for review.
Two-way matching
Services, subscriptions and utilities have no physical delivery. There is nothing to receive. For those, a two-way match against the purchase order, with the budget owner confirming the service was performed, is the right control. Forcing a three-way match on services only creates a permanent exception queue.
Worked example
Within tolerance
PO 5518 orders 500 units at $12.00. The warehouse records 500 received. The invoice bills 500 at $12.10, a total of $6,050 against $6,000 ordered. The variance is $50, or 0.8%, within the 2% tolerance. The invoice clears. Had it billed $12.50 a unit, a 4.2% variance, it would have been held for the buyer to review.