Three-way matching is the check that a supplier invoice agrees with the purchase order and the goods receipt before it is approved for payment. If the quantities, prices and totals on all three documents line up, the invoice is paid, and if they do not, someone has to find out why first.

Every accounts payable team does some version of three-way matching. Few do it well, because it usually means a person with three PDFs open, comparing lines by eye. This article explains what is matched, why the manual version breaks, and how it runs automatically with the ERP.

The three documents

Purchase order

What you ordered. Supplier, items, quantities, unit prices, currency, delivery terms. It lives in the ERP and is the reference everything else is checked against.

Goods receipt

What actually arrived. The warehouse confirms the items and quantities received against the PO. It also lives in the ERP.

Supplier invoice

What the supplier wants to be paid. It arrives by email as a PDF, in the supplier’s own layout, and it is the one document that does not start in your ERP.

What is compared

The fields that have to agree

• Supplier and PO number
• Item and quantity per line, in the same unit of measure
• Unit price and currency against the PO
• Invoiced quantity against received quantity
• Tax, freight and the total

Two-way versus three-way

Two-way matching checks the invoice against the PO only. Three-way adds the goods receipt, so you never pay for goods that did not arrive. For physical goods, three-way is the norm.

Why it fails when done by hand

The invoice has no PO number

The clerk searches by supplier and amount. Sometimes they pick the wrong PO and the error shows up on the next invoice.

Partial deliveries

One PO, three deliveries, three receipts, three invoices. Matching invoice two to receipt two by hand takes time, and the running quantities are easy to get wrong.

Small differences found late

A price that moved by a few cents, a freight line that was never on the PO, an invoice sent before the goods arrived. By hand these are caught at month end, if at all.

How it works with DOConvert

Matching before entry, not after

DOConvert is the AI layer for the ERP. It reads the supplier invoice from the email, without a template per supplier, and runs the match against the ERP before anything is entered.

• The invoice arrives by email as a PDF or a scan
• DOConvert identifies the supplier and the invoice type
• It finds the purchase order and the goods receipt in the ERP, in Priority through the DOConvert Priority connector, or in Oracle Fusion Cloud ERP directly
• It checks every line, quantity, price, currency and total against the PO and the receipt
• Anything that does not match is stopped with a plain reason, for example invoiced 120, received 100
• Only a matched invoice is entered, with the PO and receipt references, through the bi-directional connector

What the team sees

A short list of exceptions with the reason in plain words. Everything else is already in the ERP. For a fuller picture of the whole flow, see supplier invoice processing.

For the Priority flow in detail, read how to automate supplier invoices into Priority ERP. The reasoning behind checking against the ERP record rather than just reading the document is in Beyond Extraction, the next frontier in IDP.

Who it fits

• Controllers and accounts payable managers who approve invoices and want the match done before they see them
• CFOs in manufacturing, distribution and import companies with many physical deliveries
• IT managers on Priority or Oracle Fusion who want the match to run inside the existing ERP data

Questions and answers

Is three-way matching required by law

No. It is an internal control. Auditors like to see it, and most finance policies require it for physical goods.

What happens to an invoice that does not match

It is held with the reason. Someone checks the difference with the buyer or the supplier, and the invoice is entered only once the difference is resolved or approved.

Can three-way matching run without a PO number on the invoice

Yes, if the system can find the PO by supplier, items and amounts. DOConvert does that, and stops the invoice if there is no single clear match.

Does it work for partial deliveries

Yes. The invoiced quantity is checked against what has actually been received so far on that PO.

Want to see it on your own documents? Book a Demo or Get Started