Invoice Matching

What are the Different Levels of Invoice Matching?

Depending on the type of invoice being processed, there are several levels of matching that might be applied, with a different number of documents being compared in each level. Let’s break down those levels:

• 2-way matching is used to verify that all data matches between an invoice and a purchase order (PO).
• 3-way matching is used to verify that all data matches between an invoice, a purchase order, and a receipt of goods or services.
• 4-way matching is used to verify that all data matches between an invoice, a purchase order, a receipt of goods or services, and another document of acceptance (a certificate of inspection, for instance).

Even the most basic level, two-way matching, is far more difficult using a manual invoice processing system. Physically comparing the information on every document and purchase order that moves through your organization takes a great deal of time and still leaves the door open for errors and oversights.

Most large organizations require three-way matching for maximum quality control in their approval process. Consistent three-way matching is even more difficult to maintain without an automated invoice matching software solution. Not only must an AP team confirm that all data matches across the invoice, PO, and receipt, that data also needs to be synchronized with your enterprise resource planning (ERP) system. An automated accounts payable solution that can provide automatic three-way matching is the surest way to make sure that all relevant data is being recorded and verified.

What are Invoice Matching Deviations?

A deviation occurs when the information included in an invoice does not match up with one or more of the supporting documents. There are two main categories of invoice matching deviations:

• A price deviation means the item price listed on an invoice does not match the price data listed on the purchase order or receipt of goods or services.
• A quantity deviation means the number of items listed on an invoice does not match the quantity listed on the purchase order or receipt of goods or services.

In either case, once a deviation is identified,  it is necessary to go back and investigate where and why the deviation took place and whether it requires action before the invoice can be processed. If so, your AP department needs to retrace the invoicing steps and contact any relevant stakeholders in order to make the data line up. In a manual invoice processing system, that can be a hugely time-consuming process that often requires running an invoice several times before everything matches.

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What are the Benefits of Automated Invoice Matching?

Using an automated accounts payable solution to handle your organization’s invoice matching needs is a wise decision for virtually any business. Not only does automation provide significant time and cost savings, it also improves accuracy and efficiency across the board. Even better than that, an automated AP software system can play a key role in building and maintaining strong working relationships with the vendors who keep your business running smoothly, a huge consideration in an age of supply chain disruptions. A few of the most notable benefits of automated invoice matching include:

Better data quality

Automating your invoice matching provides deeper insights into the pain points and areas for improvement within your AP process. Automation makes it much easier to tell at a glance if a certain vendor is consistently neglecting to include certain information, or if a specific kind of invoice is more likely to create a bottleneck in your system. That level of data quality is invaluable for helping your AP team coordinate with vendors to address persistent issues and keep those invoices flowing smoothly.

Faster approval process

Even in the best of scenarios, a manual invoice matching process takes up a lot of time. It often involves routing emails or physical documents to multiple departments throughout your organization and waiting for approvals from multiple stakeholders, any one of whom can throw the process out of sync if they are absent or simply slow to sign off on an invoice. If there are any deviations found, the process of identifying and correcting them takes even longer.

An automated system routes all necessary documents to departments and individuals that need to approve them, with automatic notifications and reminders to ensure that they will not be ignored or lost in the shuffle. When deviations occur, automatic matching makes them much easier to pinpoint and rectify. That not only puts time back on your AP team’s schedule, it also helps your organization qualify for early payment discounts and improves your working relationships with valued vendors.

Touchless invoice processing

When it comes to data entry and processing, every human touch point is a chance for human error. Whatever costs a business might think it is saving by not upgrading to automation are likely to be quickly eclipsed by the expense of correcting avoidable mistakes.

An automated AP system can facilitate fully touchless invoice processing, allowing an invoice with no deviations to move through the process of receiving, capturing data, and moving through the ERP for a final payment without a single direct human touchpoint. That creates a much fast, far less error-prone process that keeps costs down as well.

More employee engagement

Even for seasoned accounts payable professionals, invoice matching can feel like a real chore. Manually comparing nearly identical sheets of numbers and names and trying to identify minor discrepancies is tiring, often tedious work. Throw in the headache of tracking down approvals and calling up busy vendors to request changes, and it is easy to see how an AP team could find itself getting burned out.

Automating your accounts payable processing takes those repetitive and time-consuming tasks out of those employees’ hands and turns them over to a more reliable, more accurate, and more efficient software solution. That frees up your AP team to concentrate on tasks that make better use of their skill sets. That provides a boost in employee engagement and overall morale, both huge considerations in an era where many teams are finding themselves having difficulty retaining employees in the long term.

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The bottom line is that any enterprise business or sizable organization that deals with a high volume of invoices likely can not afford to continue attempting two-way or three-way invoice matching without the assistance of automation. Are you ready to find out more about the many ways that upgrading to an automated accounts payable software solution from MHC can help your AP team revolutionize the way they handle invoice matching? Contact us today to schedule a free demonstration.