The Ultimate Guide to Invoice Matching: What is it, the process involved, and what to do if there are any deviations

Likely, you’ve clicked this page because you’ve either heard of invoice matching and want to know more about it, or you’ve never heard of it and want to know more about it. Either way, keep reading to find out what invoice matching is, the process involved, and what to do if there are any deviations.

What is invoice matching? 

Invoice matching refers to the process of authenticating that a supplier’s invoice is correct and matches the order placed by the buyer. This is a tiresome and time-consuming process, so oftentimes companies rely on automation platforms from companies like Xelix to do this for them. 

Invoice collection is a part of this process. All it means is collecting the invoices from the suppliers so they can be sorted and matched. 

What does the invoice matching process involve?

The invoice matching process is typically done in three steps and is therefore sometimes known as a ‘three-way invoice matching process,’ however there are also two-way and four-way matching processes too. The typical invoice matching process goes as follows:

  1. The original purchase order. This document is sent to the supplier from the buyer and confirms the purchase of a product or service. 
  2. The receiving documents. These documents are attached to the shipment sent by the vendor and provide proof of purchase. They contain details of the contents of the order and payment terms/methods. 
  3. The vendor invoice. This document is sent to the buyer from the supplier. This should contain the same information as that in the original purchase order, including an invoice number and contact information for the vendor. 

The purpose of matching and comparing these three documents is to ensure that the company’s expectations match those of the vendor. 

Two-way matching: This is where amounts listed on an invoice are matched to those on the matching purchase order.

Four-way matching: This is where amounts listed on an invoice must fall within the established tolerance levels within a buying software environment. Any invoices that don’t comply with this are then flagged and sent away for review. 

As you can see, this time-consuming task requires a large amount of resources and, well, time, especially if businesses are still doing it manually. 

What to do if there are any deviations

If any deviations are noticed within the matching process, the accounts team will have to consider any exceptions that might have been created during the receiving stage and then make a decision whether or not further investigation or resolution is needed

Once the three-way matching process has been approved, the final invoice amount is verified for payment, which is why it’s so important that deviations are picked up as soon as they occur. Things can easily go wrong with end-to-end accounts payable, with manual reporting areas being an area of special concern. With the right automation software in place, these deviations will be kept to an absolute minimum, and the software will ensure that all invoices are accounted for. 

As you can see, invoice matching is absolutely essential for all businesses, especially when relying on manual financial processes. However, with technological innovations, this can easily be done automatically, saving you both time and money in the long run.


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