3-way matching, explained: what to check before a bill is paid
A plain guide to matching an invoice against its purchase order and the delivery, and what to do when the three disagree.
Three-way matching asks one question: does the invoice describe what was ordered, what arrived, and nothing more? It does not replace judgement. It gives whoever approves the bill the same starting point every time, and it puts the disagreement in front of them before the money goes.
The three documents
The purchase order is the commitment: supplier, lines, quantities and agreed prices. The delivery note (or goods-received record) says what actually arrived. The invoice is what the supplier asks to be paid, with VAT, totals and bank details.
When the three agree, the bill has a clear path. When they don't, the difference is the work: a short delivery, a price that crept up, an invoice sent twice, or one that belongs to another order.
Match lines, not totals
A matching total can hide two wrong lines that cancel out. The useful comparison is line by line: is each invoiced line on the order, is the quantity within what was ordered, is the unit price within the tolerance you agreed to live with? Totals still have to add up, but that is a separate check.
Tolerance is a decision, not a default. A few cents of rounding on a pallet of paper is noise; ten percent on a unit price is a conversation with the supplier.
Two-way or three-way
Two-way matching compares the invoice with the order. Three-way adds proof that the goods or services arrived. The third document costs a step, so it pays off where paying for the wrong thing costs more than checking: stock, materials, anything delivered in part.
When the documents disagree
The right result is a clear hold, not a forced match. Name the line that differs and by how much, keep the source documents beside it, and let the person who can settle that question settle it: accept the variance with a reason, ask for a corrected invoice, or wait for the delivery.
Matching is one control, not a verdict on the whole bill. A perfectly matched invoice can still carry changed bank details, or be the same invoice sent twice. Those need checks of their own.
How DocuBite does it
Each invoice line is matched to its purchase order line. Quantity and unit price are compared with the tolerance set for the company, and a line outside it is held with the difference named on the line, as above. What has been invoiced against each order line adds up across invoices, so a second invoice for the same 500 flyers shows as over the order.
Three-way matching applies to suppliers you mark as needing goods received: a delivery note confirmed against the order is what lets their invoice through. A reviewer can correct a match by hand (Match manually), and the checks run again when they leave it. Holds that need a decision go to the approvers your PO mismatch route assigns.
If you keep the books for several clients, tolerances and routes are set per company, so one client's tolerance never applies to another's.
A review sequence that holds up
- Confirm the invoice and the order are the same supplier relationship.
- Compare the lines: quantity, unit price, VAT and currency.
- Check that the delivery covers what the invoice bills.
- Settle any variance with a recorded reason.
The value of matching is the trail it leaves: anyone can later see what was compared, what differed, and why the bill moved on.