Three-way matching

Definizione

Three-way matching reconciles three documents (the purchase order, the goods or service receipt and the supplier invoice) before releasing payment. It prevents overbilling, duplicate invoices and payment for undelivered goods, and is a cornerstone control in procure-to-pay and audit.

Esempio

An invoice for 100 units is held because the goods receipt shows only 90 were delivered; payment follows after the discrepancy is resolved.

Perché rappresenta un rischio aziendale

Skipping three-way matching is one of the most reliable routes to financial loss in procurement: overbilling, duplicate payments and payment for goods never received are all difficult to recover after the fact. Auditors treating the absence of matching controls as a significant deficiency is standard, and regulators may treat systematic failures as fraud risk.

Come gestirlo

• Make three-way matching a system-enforced step, not a manual review, so it cannot be bypassed under time pressure.
• Define acceptable tolerance thresholds for price and quantity variances and require approval for any exception above those limits.
• Ensure goods-receipt records are created promptly and accurately at the point of delivery.
• Audit exception rates regularly; a rising rate signals deteriorating process discipline.
• Resolve mismatches promptly to avoid late-payment penalties while keeping incorrect invoices unpaid.