A Complete Guide to Invoice Matching: Types, Processes and Automation

In addition to header-level matching, IDPs can perform line-item matching. This granular matching compares the line-item details from invoices against the corresponding line items in POs, helping identify discrepancies at the item level and preventing overbilling. Exceptions and disputes often arise during matching due to discrepancies. To resolve them, you need the AP team, suppliers, and internal departments to collaborate with each other. If there are information silos and lack of standardized workflows for handling exceptions, the process can become chaotic and time-consuming.

Challenges with automating invoice and PO matching

Stampli lets users select multiple POs for an invoice, partially bill POs, and apply multiple invoices to a PO for accurate processing and reporting. It also processes PO and non-PO invoices on the same platform for consistent and efficient invoice verification. Finance operations platforms check every vendor invoice detail against the PO and flag discrepancies for investigation.

Tips to Improve Your Invoice Matching Process

Manual processing includes obtaining physical documents in the form of journals or ledgers. The primary purpose of an invoice matching process is to verify HOA Accounting that the goods and services you receive align with your original purchase order and that the pricing and quantity are also accurate. As mentioned, invoice matching is a very important part of your company’s accounts payable process. AI-based document classification can automatically categorize incoming documents into types like invoices, purchase orders, receipts, credit notes, etc. This ensures that only relevant documents are processed for matching, reducing errors and saving time.

Step 4: Choose what to automate

Additionally, discrepancies or errors can lead to invoice exceptions, causing further hold-ups and necessitating extra effort for resolution. Collectively, these challenges significantly affect the efficiency and effectiveness of the invoice matching process. Deploy automated matching software to verify invoices against purchase orders and receipts. Modern invoice automation software can validate key fields, apply matching rules, and route exceptions https://zisa.com.hk/explanation-steps-example-3/ automatically. Invoice matching is the process of comparing an invoice with supporting documents—such as purchase orders and receipts—to ensure all details match before payment is processed. This helps verify that the goods or services billed were actually ordered and received, preventing errors and unauthorized payments.

• This is the most important step, where the invoice is compared to the Purchase Order (PO) and Goods Receipt.
• The matching process typically involves verifying the quantity, price, and item descriptions, and any discrepancies are investigated and resolved before payment is made.
• This reduces costly payment errors and supports clean financial reporting.
• The invoice may also contain credits, early payment discounts, or notes indicating products still to be delivered.
• This approach minimizes the risk of paying for substandard goods or services.

Initial validation checks confirm basic requirements like tax numbers, purchase order references, and mathematical accuracy before routing invoices to matching workflows. This article explores the evolution of invoice matching from manual verification to automated intelligence, examining different matching types, implementation strategies, and automation benefits. From data entry errors to incorrectly archived documents, a lot can happen when you’re matching invoices manually.

• Automated invoice matching makes it easy for BTB’s product teams to verify input costs by ensuring the invoice costs match the PO costs for each input.
• Once the shipment arrives, the receiving department verifies the quantity, and the quality control team inspects the steel to ensure it meets industry standards.
• Matching is the process of associating aninvoice with a purchase order, receipt, or consumption advice.
• Automated resolution paths handle routine variances within predetermined tolerances, while larger discrepancies trigger escalation procedures.
• Discover how HighRadius enables touchless 3-way invoice matching across high-volume AP environments.
• If you match to a purchase order schedule that hasmultiple distributions, the matched amount is automatically proratedacross all the distributions on the schedule.

To perform three-way matching, you need a purchase order, a goods receipt note (GRN), and an invoice. According to the ACFE, they experience billing fraud twice as often as larger organizations, with median losses reaching $141,000 in 2024. If documents are complete and error-free, compiling them becomes less of a hassle. Invoice matching can help identify invoices outside of normal limits by setting up tolerances for invoice amounts and quantities. If the invoice is rejected, the invoice matching vendor will be notified and asked to correct the exception.

A good invoice matching policy helps improve relationships with your suppliers by preventing unnecessary questions. While three-way invoice matching is important and can save your business time and money, you will run into issues if you’re doing it manually. Three-way matching creates a built-in check to the vendor payment process, ensuring a positive supplier-buyer relationship. Book a demo today to discover how our platform can help your business seamlessly sync procurement operations with payments.

• Shifting to a digitized process ensures promptness in payments, accuracy in encoding data, and accessibility in various platforms.
• The business workflow can be enhanced significantly by using tools that support touchless invoice processing.
• This is not an offer to, or implied offer, or a solicitation to, buy or sell any securities.
• Three-way invoice matching is a process of comparing an invoice against a purchase order and a goods receipt to ensure that the goods or services invoiced match those that were ordered and received.
• By verifying that invoices align with purchase orders and receiving reports, businesses can prevent overpayments, reduce errors, and avoid fraud.
• Luckily, I switched to Moon Invoice and found the hassles of stock and expense management getting faded.

Match with supporting documents

Invoice matching process is an important undertaking for your business to ensure smooth financial transactions. If you don’t handle this issue effectively, it can lead to increased error rates, delays in processing, and potential overpayments or duplicate payments. Furthermore, your team will lose a ton of time on manual file conversions or copy-pasting data.