Three-way match: how to check order, delivery and invoice before you pay
What does a three-way match check?
Before you pay a supplier invoice, three documents should agree: the purchase order says what you agreed to buy and at what price, the goods receipt says what actually arrived, and the invoice says what the supplier wants to be paid. A three-way match compares the quantities in all three documents, and the price on the order with the price on the invoice, before the payment goes out.
Take a purchase order for 400 sensor housings at 12 euros each, 4,800 euros in total, split across two customer projects: 300 units for one and 100 for the other. The supplier delivers 250 in the first week and 150 two weeks later, then sends one invoice for all 400 at 12.40 euros each, 4,960 euros. The quantities agree across the two deliveries, but the price does not. Someone has to notice the 160 euro difference, ask whoever placed the order whether a price increase was agreed, and hold the payment until the answer comes back. Once the difference is cleared, the invoice has to be split according to the order, 300 units to one project and 100 to the other, so that each project carries its own cost.
For services, where nothing physical is delivered, the check is usually a two-way match between the order and the invoice.
Why do most companies only check the large invoices?
With a handful of invoices a month, checking all three documents by hand is manageable. At one company we spoke to, the purchaser uploads each incoming invoice to the open order and compares the prices by hand before it goes to finance. With several hundred invoices a month, that no longer works, because the three documents sit in three places: the order in an email or a purchasing tool, the goods receipt (often a signed delivery note) in the warehouse, and the invoice in your accounting inbox. So the check is limited to invoices above a certain amount, invoices from new suppliers and invoices where something looks unusual.
The invoices that are not checked are the small, familiar ones from regular suppliers, which is also where a duplicate payment or a gradual price increase is least likely to stand out.
The goods receipt makes the manual check harder, because it depends on someone outside finance confirming that the delivery arrived, and if that confirmation is an email to a shared inbox, it can easily be missing when the invoice comes in. Orders also change after they go out: one company told us their order amounts are often edited afterwards, so a strict match fails on small differences and falls back to manual work anyway.
How do you allocate an invoice across several projects?
If your company builds hardware or runs projects, the match is only half the work. One order often covers several projects, deliveries arrive in parts, and, as in our example, one invoice line for 400 units has to be allocated to the right projects according to the order. If the whole invoice is booked to one project because splitting it takes too long, one project looks more expensive than it was and another looks cheaper, and the project margins your management relies on are wrong. One manufacturer told us they want their engineers to become owners of their project costs, which only works if every invoice reaches the right project.
How do you match every invoice?
Once all three documents are in the same system, the comparison runs automatically, so it can cover the small invoices as well as the large ones. Quantities and prices that agree are cleared for payment, differences are flagged on the line they concern, and partial deliveries are tracked against the order until it is complete. A small tolerance, agreed in advance, keeps minor differences such as rounding or a small edit to the order from blocking a payment.
In Agent F, the purchase order, the goods receipts and the supplier invoice sit in the same system as your bookings. Going back to our example, when the 4,960 euro invoice arrives, Agent F compares it field by field with the order and both goods receipts. It finds that the quantities agree and flags the price line, where the invoice charges 40 cents more per unit than the order. Whoever placed the order confirms or rejects the increase, and once it is settled, the invoice is split between the two projects by its order lines, without anyone rebuilding the split by hand.
Invoices where everything agrees go straight into the approval flow for supplier invoices, and when the payment goes out, it is matched to its invoice automatically. The projects, cost centres and tolerances the match uses are your own, because Agent F is configured to how your company buys and builds, through what we call the ERP Factory. The bookings go to your tax advisor through the DATEV export.
Learn how Agent F works, and book a demo at agent-f.ai/demo to see it run on your numbers.