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Why Three-Way Matching Is Not Enough

Automated three-way matching is ‘quasi’ automation—it is still dependent on manual data entry. This is particularly problematic with AP solutions designed to manage indirect spend, because they don’t integrate with your ERP. Even general ledger integrations, which may be able to pass transactions back and forth, still don’t fulfill the receipt transaction or voucher the invoice back into the ERP. Having a solution that automates “matching” without keeping itself up-to-date as conditions change leaves a company and its suppliers reliant upon manual data entry. 

When you consider that more than half of all POs will change in their lifecycle, it’s easy to see that manual data entry leaves the door open for a lot of errors in your ERP. Without automation, there are multiple points where bad data can result in a mismatch and require manual repair processes that require valuable time and resources.

Partial Shipments Are Common (And Here to Stay)

Three-way matching (automated or not) is very complex. Companies need to look at what was ordered, what’s on the receipt, and what has actually been fulfilled. Partial shipments are common, and they lead to partial receipts as well as multiple receipt transactions that must go to one voucher or invoice. About 75 percent of invoices match for most organizations, but if they still require manual oversight because of partial shipments, the time spent matching correct invoices is not beneficial—it’s just lost time.

Three-Way Matching Isn’t Meaningful If Two of the Documents are From the Supplier

For many companies, three-way matching consists of matching a supplier invoice, the supplier’s packing slip, and their own PO. The risk of this method is that two of these documents come straight from the supplier. Companies may do this for many reasons, including the ‘we’ve always done it this way’ justification. Unfortunately, the invoice and packing slip are likely built off each other and, therefore, if one contains an error, the other likely does too. When companies have an ERP system they trust, they can start at the source, ensuring that the PO receipt and the invoice match.

AP automation is far more than systems-driven three-way matching. Using ERP data to ensure that the invoice is correct, the PO is correct, and the receiving transaction is correct requires all process-driven data to be accurate as well. Given the average rate of change to most POs, keeping everything up to date is far more of a challenge than the matching itself.

SourceDay automates AP process for supply chains, freeing up time and resources to focus on the 25 percent of invoices that truly need human attention. 

Learn more about three-way matching and AP automation by scheduling a demo with our team today.

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