As an entrepreneur and a business tycoon, the last thing you need to do is pay an imprecise or fraudulent invoice. The approach and adaptation of three-way matching can help protect your accounts payable against wrongly and illegitimately submitted invoices. In the present day world, a huge and vast number of entrepreneurs are adopting and utilizing three ways match processing to minimize the risk factor and reign in corporate spending. Companies and entrepreneurs should integrate automatic three-way matching systems into their accounts payable in order to deal with the threat of overpayment or payment of a bogus invoice for products and services.

So what exactly is the three-way matching system? Three-way matching is a methodology for evaluating and verifying payments to ensure a manufacturer's invoice is authentic and legal. The invoice must satisfy the following criteria:

1. The relevant details on the supplier invoice to a duplicate/copy of the specific purchase order which the   procurement unit or department has transferred to it.

2. The purchase order must outline the quantity and cost at which the corporation consents to acquire the products or services indicated and mentioned on the supplier's invoice.

3. The supplier invoice to ensure the quality of goods, the correct quantity and the condition of delivered items.

Therefore, the principle of "three-way match" applies to combine three records-the invoices, the purchase order and the recipient report-to guarantee that a payment has been made. The objective of three-way matching is to demonstrate any discrepancies between three significant procurement documents - Purchase orders, copies of orders/packaging slips and invoices. This technique is used to ensure the repayment of approved transactions, thereby avoiding damages, loss, fraudulent activity and carelessness. Click on the link https://www.freshbooks.com/invoice-templates/word to get every detail regarding an authentic and professional invoice

The working scenario of 3-Way Match:

Three ways match applies to the 3 factors that have to be included in a framework for invoice approvals.

1. Purchasing generates a purchase order that goes to the distributor, while the PO system has intact a digital copy.

2. Receipt of Goods and Services: When a company receives the products in a distribution warehouse, loading station or remote location, the person who receives the product inserts the details on the PO or packaging list into the PO database to collect the items.

3. Invoice: Both Purchasing and Accounts Payable ensures that the PO and receipt of products fit (or at least match under defined parameters) and submits the invoice for acceptance and payment.

This is the approach a B2B transaction should be treated and handled by procurement and accounts payable authorities.

Getting accuracy: 

Once the method of three-way matching is implemented, the process includes the following factors:

1. Buying generates a PO as normal and the PO details are used by the automation system that matches the AP of the SaaS provider

2. The person who receives the goods enables the PO in your PO or ERP program after receiving the goods and crosses off the goods obtained by the PO panel. This receipt against the PO is then forwarded to the AP solution for automation corresponding to the provider.

3. When the e-invoice appears, all documentation is digital down to the line item point and is linked up with the appropriate automated system. As the biggest challenge of the match isn't getting the invoice details to simplify the match, e-invoicing fixes this problem. This is because the data comes straight from the vendor's payment system, minimizing the need to search at the paper or a picture individually from the text.

The benefits of three matching systems for businesses:

1. Tracking Effectiveness:

The 3-way matching approach helps the Purchasing Department and Accounting Personnel (A / P) to monitor the effectiveness and performance of the company's structures for the purchasing, obtaining and performing product invoices. Therefore, not only would these departments have a firm grip on the procedures happening and taking place, but they could also spend less time on actively tracking records like PO's, invoices, GRN's, etc.

2. Prevention of fraudulent invoice:

One of the numerous approaches to preventing a fraudulent invoice is through this robust 3-way matching system. It is less likely to get under the radar by comparing multiple sources. It is one of the most preferred techniques to avoid invoice fraud and manipulation. Using this program will allow fraud prevention and repeat invoice transaction, and consistency of financial transactions.

3. Improve Profitability:

Three ways match processing can have a beneficial effect on the primary concern of an organization. By checking the data, you can safeguard your business from an overpayment, repeated payments, or bogus invoices.

Accounts payable are among the fields which are likely to lead irregularities, errors or misappropriation in cash flow and assets of the company. Internal checks could help mitigate the risks. The three-way match a very well-known regulation and monitoring of the accounts payable.

Purchasing and accounts payable sectors are at significant risks related to mistakes or misuse of money. Ensuring that such failures and blatant misrepresentations are alleviated is crucial and at times essential to a company's sustainability. Most businesses are now using advanced software solutions (e.g. ERP), which incorporate purchase order, product receipt, and accounts payable procedures, especially in the mid-size to big companies. These applications would potentially have the three-way match as one of the features of the software and will automatically execute all matching. When no malfunctions exist, the system will redirect vendor invoices for the transaction. If there are variations, they will be entitled to tolerable variation standards, and those that exceed tolerable variances would allow company employees to intervene. Investigating minor, trivial discrepancies and making payments to suppliers (which can aggravate vendors or prevent a chance to take early withdrawal discounts) may be ineffective. Thus tolerable variances of variability are sometimes tolerated and permitted by the company's policies. For instance, a discrepancy in quality or price of 5% or fewer can be considered appropriate and no action would be considered essential; the seller invoice would be accepted for payment.