What three-way match is and how to automate it

Three-way match is the control that compares three documents before a supplier invoice is paid: the purchase order, the delivery note (goods receipt) and the invoice. If all three agree, within set tolerances, the invoice can be posted and paid safely.

The three documents

• Purchase order: what was ordered, how much and at what agreed price.
• Delivery note: what was actually received, how much and when.
• Invoice: what the supplier is charging you.

Two-way versus three-way match

Two-way match compares only the order and the invoice. That is enough for services or purchases without physical delivery, but it will not catch goods invoiced that never arrived. Three-way match adds the receipt, and that is its value: you only pay for what you ordered and received.

Why it rarely matches first time

• Partial deliveries: one order arrives in several delivery notes and is invoiced at once, or the other way round.
• Price differences: updated rates, discounts, freight or surcharges.
• Different units: the order is in boxes and the invoice in units.
• Item codes that differ between the supplier's catalogue and yours.
• Errors when keying data by hand.

Tolerances: matching without blocking everything

Requiring an exact match blocks too many invoices over cents. That is why tolerances are set: by amount, by percentage or by quantity. Whatever falls inside is approved automatically; whatever falls outside is reviewed. The right tolerances depend on the type of purchase: raw materials are not the same as freight or services.

How to automate it

1. Capture and read invoices and delivery notes automatically, wherever they come from.
2. Identify the supplier and the purchase order for each document.
3. Match line by line using rules and tolerances you define.
4. Send only the exceptions to review, with the reason explained.

The key is explainable rules: if an invoice is blocked, the team must see which line fails, by how much and against which tolerance. A system that only says "doesn't match" saves no work.