What is 3-way matching?
3-way matching is the check that compares a purchase invoice against the purchase order and against the goods receipt, on both quantities and prices, before the invoice is approved for payment.
Also known as: three-way matching, three-way match, invoice-order-receipt check
The name comes from the three documents held against each other. The purchase order says what you ordered and at what price. The goods receipt says what actually arrived. The invoice says what the supplier wants to be paid for. If those three agree, there is no reason to review the invoice by hand.
When something differs, the question is who should resolve it. A price difference is a question for purchasing. A quantity difference is usually a question for the warehouse. A line that is not on the order at all is a question for the budget holder. Good matching therefore has two halves: the arithmetic, and routing whatever does not agree to the person who has the answer.
2-way matching leaves out the receipt and compares only invoice and order. That is faster, and it is enough for services where nothing physical arrives. For goods it means you pay for what was ordered rather than what was delivered, and that gap is exactly where money leaks away.
In Exact Online
In Exact Online the purchase order and the goods receipt live in the Trade or Production modules. Exact Online itself does not perform an automatic three-way check at invoice line level when a purchase invoice is entered: you can link an invoice to an order, but the line-by-line comparison, with tolerances and with routing of differences, is done by a separate solution. Glimps reads the open orders and receipts from Exact Online and matches per invoice line.
What is compared
A match that only looks at the total misses most of it. The comparison belongs at line level, on four values.
- Item or description: is this line on the order at all.
- Quantity ordered against quantity received against quantity invoiced.
- Unit price on the order against unit price on the invoice.
- Line total, including discount, surcharge and freight that sometimes sits on a separate line.
Why partial deliveries make it hard
An order of a hundred units can arrive in three shipments and on two invoices. The sums then have to work across the whole order, not per document. That means a matching solution has to track what has already been matched, otherwise you pay for the same receipt twice. This is the most common reason manual matching in a spreadsheet falls apart.
Tolerances, and why they are not laziness
Almost no invoice matches to the cent. Rounding on unit prices, exchange rates, fuel surcharges and delivery weight all create small differences. A tolerance says: below this amount and below this percentage the difference is not worth chasing. Without a tolerance your system blocks on seven cent differences and your team learns to click every block away, which is worse than no control at all.
Where it usually goes wrong
- 1Matching on the total only. Two lines that cancel each other out then slip through.
- 2One tolerance for everything. One percent on a 50 euro invoice is not one percent on 50,000 euro, so set the amount and the percentage separately.
- 3Piling differences on a stack instead of sending them to a person. An exception with no owner is an invoice paid late.
- 4Skipping the goods receipt because the warehouse books it late. Then you match against the order and pay for what was ordered.
Frequently asked questions
Common questions about 3-way matching.
Questions about your situation?
Open the demo2-way compares the invoice with the purchase order. 3-way adds the goods receipt, so you check that what you pay for actually arrived. For services 2-way is usually enough, for goods 3-way is the norm.
Yes. A fourth document is added, usually a quality or inspection report. You see it in manufacturing and food, where a delivery is only accepted once it has passed inspection. The principle stays the same: each extra document is one more condition before payment.
Exact Online tracks purchase orders and goods receipts, so the data is there. An automatic comparison per invoice line, with tolerances and with routing of differences to the right person, is not part of standard invoice entry. Companies use a connected solution for that.
You cannot match it, by definition. There are two routes: have an order created after the fact, or send the invoice through an approval rule on amount and cost centre. Roughly half of all purchase invoices in mid-sized companies never have an order, so a solution that only matches solves only half your work.