What is three-way matching?
Checking that the purchase order, goods receipt and supplier invoice agree before payment.
In detail
The three documents are: the purchase order (what we want to buy and at what price), the goods receipt (what was actually received and how much), and the supplier invoice (how much the supplier wants us to pay). Payment is made only when items, quantities and prices all match across the three. It is a basic checkpoint against overpayment and wrong payment.
For example
100 cartons were ordered, only 95 were received, but the invoice is for 100. Three-way matching reveals the difference, so you pay for only 95 or ask the supplier to make up the shortfall.
How companies use it
Set up automatic matching in the ERP or finance system, raise an alert whenever a discrepancy appears, and have purchasing and the warehouse confirm before it is handled.
Common misconceptions
Skipping the check because the supplier has been a partner for years and is trusted. Most errors are not deliberate, but without checking they will certainly go unnoticed.
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