What is Invoice Matching?
Invoice matching compares supplier invoices with purchase orders for 2-way matching or purchase orders and receiving reports for 3-way matching.
Line items, price, and quantity are compared to detect discrepancies. When invoice matching results in significant differences, an invoice holds delayed payment until the resolution occurs with the vendor and the invoice is approved.
Read more about it here: What is Invoice Matching?.
How Does AP Automation Software Capture and Store Vendor Invoices?
Invoices are either uploaded in a supplier portal, received as email, text message attachments, or captured through OCR document scanning. Automatic invoice processing systems extract OCR text, assigning invoice data fields for supporting document matching.
Electronic vendor invoices, purchase orders, and other supporting documents like contracts are stored and accessed through the ERP system and the integrated supplier portal.
How is RPA Technology Used for Invoice Matching?
AP automation software employs robotic process automation (RPA) to accomplish routine tasks and make workflows more efficient.
RPA uses artificial intelligence (AI) and machine learning (ML), deploying thousands of algorithmic rules to make decisions and discover exceptions like vendor invoices not matching purchase orders (POs) or receiving reports in 2-way or 3-way matching.
How Does Automatic 2-Way Invoice Matching Work?
In automatic 2-way matching, AP automation software systematically compares invoices and purchase orders. 2-way invoice matching is for purchases that don’t need a receiving report.
A business sets up guidelines and tolerances for exceptions when matched with supplier invoices to purchase orders. Exceptions require follow-up with the vendor to get the invoice corrected before it’s approved and paid.
Examples of procurement needing 2-way matching are SaaS software online subscriptions and consulting services received.
How Does Automatic 3-Way Invoice Matching Work?
Automatic 3-way invoice matching uses software to compare the vendor invoice against the purchase order and the receiving report prepared upon receipt of goods.
Businesses use 3-way matching for inventory purchases that are shipped from vendor to customer after purchase.
In automatic 3-way invoice matching, AP automation software automatically checks the vendor name, line items, quantities, and prices on the invoice by comparing them to the purchase order and receiving a report.
3-way matching detects discrepancies within pre-established guidelines and error tolerance. The system flags exceptions for follow-ups that need to be resolved.
Chapter 5: All About Invoice Matching: Automatic 2-Way & 3-Way Invoice Matching