What is Invoice Matching?

Invoice matching involves comparing and linking a supplier invoice with the underlying data on which the cost is based – a purchase order and goods delivery receipt (GDR), or a contract.

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Matching invoices to purchase orders

Manually matching invoices to purchase orders (PO) and goods delivery receipts (GDR) is complex and time-consuming. Especially when it requires matching invoices to purchase orders at the line level. In complex cases one invoice may include goods or services for all purchases done over a month's period, hence bundling multiple purchase orders from different buyers within the organisation. Accounts payable is then tasked to trace down which invoice item correspond to which purchase order. 

An digital accounts payable (AP) automation solution can handle the invoice matching process in a fully automatic workflow – completely touchlessly. With an intelligent matching engine using AI and machine learning technology AP solutions of today can handle the most complex matching scenarios and help save valuable time for the accounts payable team.

What is invoice matching deviation? 

When the information on the invoice does not match the underlying data from the PO, GDR or contract, a deviation (or exception) occurs. This deviation must be reviewed and handled by the person within the organisation who is responsible for the purchase in question. In many cases, this can be a complex and tedious task. Here's how accounts payable software can simplify and streamline the process by automatically identifying deviations and sending only the specific invoice lines to the right person for review and a decision.

Different levels of automated invoice matching

There are different levels of automated invoice matching. These refer to the number of supporting documents an invoice is matched against in the invoice matching process.

  • 2-way invoice matching verifies that the invoice match the corresponding purchase order
  • 3-way invoice matching verifies that the invoice match both the purchase order and the receipt of the goods
  • 4-way invoice matching adds another criterion to verify that the invoice details also match the acceptance or inspection document in the case this step is part of the purchasing process

Most companies use 3-way invoice matching. It is essential to understand that to enable automated 3-way invoice matching you need to ensure that master data, including vendor ledgers, purchase order details and goods receipts, can synchronise seamlessly between the ERP system and the AP automation solution.

Learn more about invoice matching

Read our blog post: The fundamentals of invoice matching

Download a white paper: 5 ways to drive touchless accounts payable

Explore more definitions in this blog post: Key terms for AP professionals