When it comes to managing the invoicing process of a middle-market company, there is one crucial point that an accounts payable team may want to heed. More specifically, they should consider that establishing a strategic accounts payable process is a necessity for any business owner that is concerned with safeguarding their accounts payable and streamlining their business processes.
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Implementing an automated 3-way invoice matching process is a good way to help protect your business. This is an internal control process that helps you compare item details line by line and make sure the totals are matching up between purchase orders, receipts, and invoices. Since this is an automated process, the software can do the hard work for you, reducing the need to do this work by hand.
This also becomes useful in cases of protecting your business’ accounts payable. These systems are designed to verify and help you correct mistakes before making a payment. This helps you catch potential flaws that may be in an invoice and can save you from the headache and stress from paying a fraudulent or inaccurate invoice.
There can be many benefits for automated 3-way invoice matching. For one, it can help your business save money in the long run. This is through its data verification process that keeps everything consistent across purchase orders, receipts, and invoices. By keeping a close eye on your finances, it will help lower the chances of fraud. These systems also facilitate a good relationship between vendors. By decreasing the number of mistakes within your accounts payable process, you are also doing the vendor a huge favor and showing them that you value their relationship. Finally, an automated 3-way match system will be tremendously helpful should you face an audit. When auditors come to check your business’ finances, you can easily pull out clear documentation of what goes on in your company. Since these systems help line up numbers for you, you can be sure that auditors will not find discrepancies in your workplace.
When it comes to an accounts payable process and choosing an automated matching system, there are a few different approaches companies can take. When reviewing software automation you may wonder what is 2-way and 3-way matching in accounts payable?
To begin exploring this idea we need to break down the three key components that answer the question “What is 3-way matching in accounts payable?” These are:
Using 3-way matching can highlight anything between these documents that are inconsistent. In terms of software, AvidXchange can track invoices, POs, and bill payments. Since you can track all three using AvidXchange, the software can help you automate 3-way matching.
2-way matching compares the invoice against the purchase order. The specifics it looks art are the quantity and the amount issued on each of these documents. It only checks to make sure these two documents are aligned. You can use the AvidXchange app to help you automate 2-way matching.
AvidXchange has developed solutions to your accounts payable needs. That way, middle-market businesses may be able to better process their invoices via practical software solutions that are designed to automate and streamline the payment process.
Our software solutions are capable of integrating with other accounting software. This means you may not need to change your existing processes to accommodate new accounting software from AvidXchange, and you can stick with what you are familiar with. AvidXchange may be able to sync with your current accounting software when you process purchase orders, invoices, and bill payments. AvidXchange has over 210 integrations that can help you add AvidXchange into your existing workflow with common accounting software systems. This allows you to streamline your 3-way match journal entries through automation.
A 2-way matching in accounts payable works similarly to a 3-way match system. The main goal behind a two-way match system is to ensure that your finances are in order and you are not overpaying or making any egregious errors on any of your accounts.
Businesses that do not have software managing their PO matching system may end up wasting precious time and resources. An automated matching system is able to sort through data quickly and catch errors effectively. Businesses that do not have this can end up in a time consuming, frustrating process that leaves a lot of room for error.
A two way matching of invoices compares two different documents to ensure accuracy and creates an automated process of 2-way match journal entries. This can make your accounts payable process more efficient and easier to manage.
Before you can understand what 3-way matching entails, it might help to review some examples of 3-way matching in practice. In doing so, you may be better able to grasp the 3-way match accounts payable process and what steps will occur once the process has been automated.
The 3-way matching process would begin when you receive an invoice from a vendor. Before you fulfill the invoice, you would have to review the purchase order to ensure that it had been approved. That would entail not only reviewing the services or goods rendered and their associated costs but also verifying that the quantity reported matches the quantity on the invoice.
After you completed this process, you would review the order receipt as well with both the invoice and purchase order still at your side. You should have a packing slip that also confirms the services rendered, the cost, and the quantities. If all details are correct, the numbers specified on this packing slip should mirror those on both the purchase order and invoice. Once you have confirmed that all three documents agree with one another, you would forward the invoice to accounts payable so that it can be fulfilled. If any discrepancies appear, then you would have to put the invoice on hold until the issue is resolved.
When you choose to invest in a 3-way match for services, you could streamline this entire process. While handling a handful of 3-way matching tasks may be feasible, it becomes unsustainable when there are numerous invoices to process to ensure that suppliers can be paid on time. Matters could grow even more complicated if your accounts payable team detects a discrepancy; in that case, they would have to recheck all of their work, which requires a significant amount of time. By automating the 3-way matching process, your accounts payable team may be able to devote their time and energy to other projects that could contribute to the business’ growth.
AvidXchange automated solutions could help you manage your accounts payable process. More specifically, 3-way match internal control could automate a multi-step process that would otherwise likely require the accounts payable team to devote more time and labor than feasible.
What are the Important Documents in the 3-Way Matching Process? The 3-way matching process requires three specific documents to be checked against one another to ensure that tolerances are met before an invoice can be fulfilled. These three documents are the invoice, the purchase order, and the order receipt.
It could be simple for our software to perform an automated 3-way matching on your accounts payable. With automated 3-way invoice matching, those three essential documents could be organized and compared electronically. Moreover, you could implement the 3-way matching process into your current accounts payable workflow without having to change too much of any existing systems already in place. By implementing a 3-way match tolerance, you could potentially reduce the risk of human error affecting the process. Automating the process could also make meeting early payment terms more manageable, which could in turn increase potential opportunities for earning discounts or payment term reductions. This consequently could keep your company from facing damaging financial setbacks.
Moreover, using software for your 3-way match internal control can help you because documents related to your accounts payable are easily accessible in one centralized location. Taking the steps towards implementing a 3-way matching process and automating your accounts payable may help protect your company as you continue to grow.
All businesses are susceptible to accounts payable fraud. Using AvidXchange to help you automate your 3-way match internal control can help keep you protected and save you time on repetitive AP tasks as you scale your business.