Accounts Payable (AP) departments have thousands of invoices that need to be processed every month.
In order to avoid unauthorized spending, invoice fraud, and duplicate or fraudulent payments to vendors, they have to manually comb through purchase orders, invoices, and receipts to match them.
This time and resource-draining invoice matching process is highly essential for accounts payable operations to run smoothly. Invoice matching ensures that payments are released after invoices are verified against supporting documents.
What is 2-Way Matching in Accounts Payable?
2-way matching invoices requires matching a submitted supplier invoice to a pre-approved purchase order. Two way matching is also know as purchase order matching where an invoice and purchase order are matched based on precise figures.
This is a default matching invoices technique used by most businesses. Once the invoice details are extracted, they are automatically matched and verified against pre-defined purchase order details.
This ensures that the vendor has billed the authorized amount before payment is processed.
What is Three-Way Matching?
3-way invoice matching goes an extra step to match the submitted vendor invoice with the purchase order and the order receipt.
In a 3-way invoice approval process, the invoice details are first matched against the purchase order details. This three-way matching ensures that the invoice information matches both the purchase order information as well as the receipt information.
If the invoice passes this PO verification, it is further matched with the order receipt fields to verify if the quantity billed in the invoice actually matches what was delivered.
3-way invoice matching is becoming the standard as it offers more protection from any fraudulent or incorrect payments to the vendor.
What is Four Way Invoice Matching?
In an effort to make invoice payments even more secure, some businesses use four-way matching too.
This adds another layer of verification where the invoice is matched against the corresponding purchase order, receiving, order receipt, and inspection data.
As a part of purchasing process invoice details should match with the acceptance or inspection document. The delivered goods or services are internally inspected and a report is submitted. AP departments then match the vendor's receipt and invoice against the inspection report to validate the correct delivery.
Accounts Payable departments can automate 2-way, 3-way, and unlimited invoice matching seamlessly with no coding necessary.
Infrrd for Invoice has pre-configured business rules for invoice matching. Let's take a look at how it works.
First, Infrrd for Invoice accurately extracts important data (such as line items, codes, quantities, invoice amount, invoice number etc.) from your invoices for matching.
Unlimited Invoice Matching
Infrrd for Invoice is easily configured to handle the above-mentioned 2-way, 3-way, and 4-way matching that most AP departments have begun to adopt into their standard practice.
But looking beyond today's needs...
Infrrd knows that change and unexpected complexity is always on the horizon.
As businesses vary and evolve, invoices may need to be matched with any number of other internal or external documents in order to validate them for payment.
Through its custom business rules, Infrrd for Invoice can be easily configured to match details from an unlimited number of documents and report the level of match for each, in the same way as 2- 3- and 4-way matching.
Vendors make mistakes too. With Intelligent Invoice Matching, you can configure the invoice processing queue to review invoices that are not a perfect match but are very close.
This can also help in detecting duplicate or fraudulent invoices.
Review & Approval Made Easy
Automated process of invoice with Infrrd enables accounts payable departments to automate invoice matching process to look for invoice exceptions and meet matching tolerances.
Faster, automated payments to vendors free up time to follow up with invoices that need more verification or correction, reducing the risk of overpayments or duplicate payments.
FAQs on Invoice Matching Process Automation
How invoice matching occurs?
Commonly invoice matching is done manually by AP executives who go through extracted data from invoices and match the required fields with extracted data from purchase orders. This is a time consuming task that can be automated with Intelligent Invoice Matching.
What is touchless invoice processing?
Fully touchless invoice processing is possible with automated invoice matching. The automated processing of invoices can help you match invoices with purchase orders more quickly and expedite faster payments to vendors so that they stay satisfied.
Furthermore, the business can benefit from better contract offers and early payment discounts, resulting in a higher profit margin.
How an invoice hold occurs?
An invoice hold occurs when the invoice submitted by the vendor does not match the purchase order particulars or the delivery receipts causing a mismatch.
How many ways of invoice matching is there?
In theory, there is no limit to how many ways an invoice can be matched. It depends on the business process needs but general practice is to match invoices at least 2 ways to ensure correct payments.
Frequently asked questions
What is Digital Transformation, and why is it important?
Digital transformation is the initiative where organizations adopt technologies to their fundamental processes to perform better. It helps achieve higher efficiency, productivity, and higher-quality output.
What are the potential challenges or considerations when implementing IDP?
One of the major challenges while implementing IDP is the normalization of the new workflows. Personnel training, process enhancements, and full assimilation require time to get fully absorbed by an organization.
In a fast-paced world filled with never-ending rivers of documents and data, organizations continuously need smarter ways to work. Teams need flexible solutions that enable them to work faster while delivering higher levels of reliable accuracy than ever before. At Infrrd, we empower teams with Intelligent Document Processing Solutions for Intelligent Work™.