Blog Post
Ensuring every payment is accurate while processing high volumes is no easy task. Manual document handling can easily lead to problems such as misfiled invoices, incorrect payments, and supplier disputes. The accounts payable 3-way match process brings order to chaos by preventing costly errors from slipping through the cracks.
Read on to learn more about how this process works, why it’s essential, and how to implement it seamlessly.
What Is the Accounts Payable 3-Way Match?
The accounts payable 3-way match is a process of verifying an invoice by comparing the information on the invoice, the purchase order, and the receiving report to ensure they match before issuing payment.
Here are the key details these important documents should contain:
- Purchase Orders: Outline the items and quantities ordered, along with the agreed-upon pricing and payment terms initially contracted with the supplier.
- Receiving Reports: Records of what was received from the supplier, including quantities, item conditions on delivery, and receipt dates.
- Supplier Invoices: State pricing for line items, total amounts billed, and payment instructions.
By methodically cross-checking these three documents, discrepancies can be caught and addressed. This helps avoid potential mistakes before releasing payments to suppliers.
The Importance of Accounts Payable 3-Way Match to AP Teams in B2B Distribution and Manufacturing
Implementing a robust 3-way match solution is becoming increasingly crucial across B2B sectors to mitigate challenges such as.
- Rising supplier payment errors and disputes: Suppliers face late or inaccurate payments when invoices contain errors.
- Tightening financial controls and compliance requirements: Standards like GAAP and regulations like Sarbanes-Oxley mandate stringent internal controls, making thorough 3-way match processes essential.
- Need for greater efficiency and cost optimization: Manual verification processes are costly, inefficient, and prone to errors.
To directly confront these pain points and facilitate the digital transformation of P2P processes, companies are automating accounts payable to create an integrated, digital procure-to-pay cycle with seamless 3-way matching.
Top 7 Benefits of the Accounts Payable 3-Way Match
Automating the matching of invoices, purchase orders, and receiving reports before each payment brings the following advantages:
1. Increases Accounts Payable Productivity
Automating the repetitive tasks of manually verifying each invoice field by field saves valuable time for your AP department. Your staff no longer need to spend hours carefully comparing documents and looking for discrepancies. Instead, document automation software can swiftly handle the matching for you, freeing up your employees to focus on more strategic work requiring human talents.
2. Meeting Important Compliance Requirements
Accounting standards like GAAP and regulations like Sarbanes-Oxley require companies to maintain adequate internal controls over financial activities and spending. Implementing automated 3-way match controls in your payment workflow helps you fulfill these obligations. It also generates an audit trail if needed.
3. Prevents Overpayments and Duplicate Payments
Before authorizing payment, the 3-way process confirms the invoice details are correct by matching them with your other documents. This careful validation protects your business from losses due to payment errors.
4. Provides Spend Visibility and Control
This process also strengthens your control over supplier spending, purchase commitments, and compliance with budgets. Any discrepancies between source documents can quickly be identified and addressed.
5. Mitigates Financial Risks
Careful governance of invoice processing secures your company from risks to the bottom line. Potential financial risks like payment disputes, loss from fraud, and non-compliance fines are better mitigated with a stringent 3-way match procedure before releasing funds to suppliers.
6. Streamlines Procure-to-Pay Integration
Automated 3-way matching allows you to smoothly integrate ordering, receiving, and invoicing activities within your procure-to-pay system. Data flows electronically between systems without manual hand-offs or re-keying of information. This end-to-end integration creates an efficient digital experience when dealing with suppliers.
7. Enables Scalability
As your business grows and transaction volumes increase, manual payment processes will struggle to keep up. However, automating 3-way invoice matching allows you to scale operations quickly. You won't need to hire more staff as workloads increase since the software can handle higher volumes independently.
Relying on manual payment processes left Dakota Supply Group's AP team overwhelmed and working 60+ hours each week. After implementing Conexiom's automated 3-way matching and accounts payable, overtime costs were drastically reduced while productivity improved.
Implementing the Accounts Payable 3-Way Match
Transitioning to an automated accounts payable 3-way match solution doesn't have to be an arduous undertaking. By taking a strategic, step-by-step approach, you can unlock transformative benefits across your organization.
● Define Your AP Optimization Roadmap
Assess where your AP department currently excels and where it struggles. Determine if your pririty is reducing payment errors, improving compliance, or boosting productivity. With objectives set, outline the specific capabilities, integrations, and workflows needed to succeed.
● Redesign Your P2P Workflows
Collaborate with procurement, receiving, and accounting teams to determine how the new 3-way match process will work. Plot out each step from purchase order to invoice payment. Determine decision rules and who will be responsible for key actions like verifying matches and approving payments. Document the new workflow in detail to guide implementation.
● Execute a Phased Rollout
Rather than overhauling everything at once, deploy the 3-way match solution in phases, starting with a pilot program. Collaborate closely with your implementation partner to configure the system, integrate it with your ERP, and establish the necessary controls and governance. Solicit feedback, refine the process, and then scale across the organization.
● Empower Your AP Champions
Provide your accounts payable staff with in-depth training on the new 3-way match policies, tools, and their roles. Designate AP workflow champions who can drive user adoption, troubleshoot issues, and continually optimize the solution.
How Conexiom Helps Distributors and Manufacturers Using SAP Business 1 Automate 3-Way Matching
As accounts payable teams face mounting pressure to enhance efficiency, compliance, and cost savings, an effective automated 3-way match process has become mission-critical. Conexiom offers the leading solution to address AP challenges head-on.
Conexiom's AP automation platform can streamline 3-way match processing by:
- Seamlessly integrating with your existing ERP, accounting, and procurement systems, for a paperless workflow.
- Achieving 100% accuracy in data extraction using machine learning.
- Intelligent verification of invoices directly against original documentation.
- Replacing labor-intensive manual line-by-line checks.
- Embedded governance features and reporting dashboards.
- Scalability to handle increasing invoice volumes without adding headcount.
Watch an on-demand webinar to learn more about how Conexiom can automate your 3-way matching and empower your AP team to eliminate overpayments, accelerate financial reporting, and boost productivity.