Can DocuWare Automate 3-Way Matching?

What is a 3-way match?

In invoice processing, a "3-way match" is a method used to ensure that the payment for a purchase is complete and accurate. This method involves matching three key documents:

1. Purchase order (PO): This is the original document sent by the buyer to the supplier specifying the types and quantities of products to be purchased, along with the agreed prices.
2. Goods received note (GRN) or delivery receipt: This document is created when the goods are delivered. It confirms that the items listed in the purchase order have been received and details the quantities and condition of the goods.
3. Invoice: The supplier sends this document to request payment. It should list the goods or services provided, their quantities and the total amount due.

The process of 3-way matching involves comparing these three documents to verify that:

1. The items and quantities on the invoice match what was delivered (as per the GRN) and what was ordered (as per the PO).
2. The prices on the invoice match the prices agreed in the purchase order.
3. The terms and conditions (e.g. payment terms, delivery dates) on the invoice match those on the PO.

If all these elements line up, then the invoice can be approved for payment. This process helps prevent errors and fraud and ensures that the company only pays for items that have actually been ordered and received. It's a fundamental control mechanism in accounts payable and procurement processes.

In cases where there are discrepancies, such as a mismatch in quantities or prices, the invoice can be put on hold and the discrepancies must be resolved before payment is processed. This process is critical to maintaining financial accuracy and accountability in business transactions.

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How does DocuWare automate 3-way matching?

1. First, the system identifies and removes duplicate or potentially fraudulent invoices, effectively preventing fraudulent activities.
2. Next, DocuWare cross-references the vendor’s name on the invoice with existing vendor records in the system. If the vendor isn't registered, DocuWare automatically initiates a vendor onboarding process.
3. For invoice approval, DocuWare uses one of the following options:
   1. QuickMatch (fully automated): This is used for regular or recurring vendor invoices. Vendors are pre-set with a specific dollar limit in the vendor master record. Invoices within this limit bypass manual checks and directly proceed to the booking stage.
   2. 3-Way match (fully automated): This method requires a purchase order (PO), packing slip and the invoice. It compares the invoice total with the open PO amount. If they align, the invoice is sent directly to the booking process.
   3. Cost centre approval: For invoices not covered by automated processes, DocuWare offers three approval alternatives:
      • No approval: Invoices are sent to the booking process after verification, with no further approvals required.
      • Requestor approval: The invoice is routed to a for designated individual or cost centre for approval.
      • Multilevel approval: The invoice is approved by multiple cost centres, allowing the invoice amount to be split between the different centres.

Do you want to learn how DocuWare can reduce your data entry time by 95% or improve your invoice approval time by 70% to 80%?

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