What Is 3-Way Matching in Accounts Payable – And Why Is It Essential for Your Business?

When your finance team handles hundreds of purchase orders and invoices each month, the chance of unnoticed discrepancies multiplies — and so does the cost of correcting them.

Every payment you make to a supplier should be backed by proof. Yet mismatches between purchase orders, deliveries and invoices still cost your business time and money, leaving you vulnerable to compliance issues and fraud.

Automated 3-way matching, powered by Optical Character Recognition (OCR) and Intelligent Document Processing (IDP), ensures every invoice is verified against the purchase order and goods receipt without adding to your team’s workload.

Three-way matching gives your accounts payable (AP) team the proof it needs before authorising any payment, ensuring each transaction is accurate and defensible. But even with automated tools available, many organisations still rely on spreadsheets and long email chains to carry out 3-way matching manually.

If your business is still manually reconciling purchase orders, goods receipts and invoices, here’s DocuWare’s guide to what 3-way matching is, how it works, and why it matters for accuracy, compliance and fraud prevention in accounts payable.

Table of contents

• Definition of 3-way matching
• Key benefits of 3-way matching
• 3-way matching vs. manual processing
• How 3-way matching is automated
• Common concerns and misconceptions about 3-way matching
• Real-life example: Glenkeir Whiskies

Definition of 3-way matching 

Before we look at its benefits, let’s clarify what 3-way matching means and outline the key elements of the process.

In accounts payable, 3-way matching is a critical control step that takes place between invoice receipt and payment authorisation. Its purpose is to verify that what was ordered, what was delivered and what is being billed are all consistent. 

By ensuring that the purchase order (PO), goods receipt note (GRN) and supplier invoice align in quantity, price and terms, AP teams can prevent overpayments, reduce fraud risk, and maintain compliance with internal and external audit requirements.

To achieve this, the 3-way matching process typically involves a series of coordinated tasks:

The most common data sources matched through this process include purchase orders, goods receipt notes and supplier invoices, received as PDFs, paper copies, EDI files or emails. Integrating these sources ensures that three-way match accounting provides a reliable safeguard for financial control and auditing.

Key benefits of 3-way matching 

Automating 3-way matching does more than just save your team time. It strengthens financial security and makes everyday AP work smoother, generating operational efficiencies. 

Here are the main advantages of an automated matching process: 

• Prevents overpayments by catching price or quantity discrepancies before a single pound leaves your account.

• Reduces fraud risk through strict, automated validation processes that flag suspicious invoices.

• Improves compliance with internal controls and external audit requirements, giving you a clear audit trail.

• Increases accuracy by removing the human errors that often occur in spreadsheet-based matching.

• Speeds up AP cycle times by using OCR and IDP to match documents automatically, so approvals happen faster.

• Strengthens supplier relationships through prompt and accurate payments that foster reliability and trust.
• Cuts manual workload for AP and procurement teams, freeing them for higher-value tasks.
• Scales easily with growth, so higher invoice volumes don’t require more staff.
• Integrates seamlessly with ERP and procurement systems to maintain consistent data across your finance tools.

Together, these benefits mean your AP team spends less time chasing paperwork and more time focusing on the financial insights that will drive your business forward.

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3-way matching vs manual processing 

Analysing the differences between manual and automated three-way invoice matching makes it easier to see the real gains. 

Manual checks are adequate when invoice volumes are low, but they quickly become tedious and error-prone as your business grows. In contrast, automation removes repetitive tasks and ensures accuracy from the start.

Here’s how the two approaches compare:

The key capabilities of automated 3-way matching software include: 

• Intelligent document capture and indexing
• OCR-based cross-document matching
• Configurable discrepancy thresholds and alerts
• Workflow routing for exceptions
• Full audit trail for compliance readiness

Overall, automated 3-way matching eliminates repetitive verification steps by capturing and matching data from POs, GRNs and invoices. It flags mismatches instantly, improving compliance and reducing fraud risk — while speeding up AP cycles.

How 3-way matching is automated

In an automated invoice processing workflow, each stage of 3-way match accounting is handled behind the scenes, so your team no longer needs to collect, compare or approve documents. Instead, the system:

• Captures all documents centrally so purchase orders, goods receipts and invoices are stored in one secure location.
• Extracts header and line-item details automatically using OCR and IDP to ensure complete, accurate data.
• Applies built-in matching logic to compare quantities, prices and terms across all documents.
• Enables touchless approvals when all data matches, allowing invoices to be processed directly for payment without additional input.
• Sends discrepancy alerts to the correct approver when data doesn’t align.
• Integrates directly with ERP and procurement systems for real-time updates and seamless payments.
• Maintains secure workflows with user permissions and full audit logging to protect data and simplify compliance.

These steps deliver faster cycle times, stronger controls and a clear audit trail without adding to your team’s workload.

Common concerns and misconceptions about 3-way matching

Even though three-way matching is a proven approach to strengthening AP processes, some businesses hesitate to automate it. Here are two of the most common misconceptions — and why they don’t hold up.

"It's too complex to automate."

It’s easy to assume that matching across three document types requires complicated setup or heavy IT involvement. Some AP teams also worry that integrating automation with existing procurement or finance systems will be disruptive.

In reality, modern solutions are designed to integrate seamlessly with ERP and procurement platforms, while supporting multiple data formats. That means automation can be configured quickly, without overhauling your existing systems.

"It's only for large enterprises."

Another common belief is that only big businesses can benefit from 3-way matching. Smaller companies often assume that the cost and effort outweigh the returns.

The truth is that even mid-sized firms see rapid ROI. By preventing errors, avoiding overpayments and reducing fraud risk, automated 3-way matching pays for itself quickly — and scales easily as your business grows.

Real-world example: Glenkeir Whiskies

Glenkeir Whiskies, the owner of the UK’s largest whisky retail chain, The Whisky Shop, with over 22 branches, faced a paper-heavy procurement process.

The finance team was manually matching around 300 invoices each month against purchase orders and goods received notes; a slow, error-prone approach that consumed valuable staff time.

Moving to DocuWare changed everything. With automated 3-way matching:

• Glenkeir Whiskies eliminated paper handling and manual matching, as invoices are processed digitally through email-driven workflows.
• Invoice data is automatically matched to goods received notes, removing the need for line-by-line checks.
• Integration with Sage 200 has enabled a seamless data flow, with no scanning or re-keying.
• Finance staff gained full remote access to documents, allowing them to approve payments from anywhere.

The results have been significant: faster processing, improved accuracy and measurable time and cost savings.

As Glenkeir Whiskies’ finance manager, Joe O’Raw, explains: “Accuracy has improved immeasurably as my team no longer manually input invoice data — this reduces human errors.”

Read the full case study. 

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