When you’re in the purchasing department, you normally want to make sure what you’re paying for, the goods/services you’re receiving, and the supplier invoice amount are all aligned.
- Otherwise you might leave your organization open to some unintended risks:
- You pay for things you didn’t order (non authorized purchases or fraudulent invoices)
- You pay for things you haven’t received yet (early payment)
- You’re late on payments for things you have received (accruing late penalties)
- You might double pay for the same goods and services (duplicate orders)
- You pay for things that someone wanted but were never approved
- Also it opens you up to: Fraud, Theft, Embezzlement, etc
Over the years, finance and accounting department business practices evolved to generally include a system of checks and balances to safeguard company interests.
Two major checks and balances are:
Approval Process makes it easier to track down who is accountable for company spending.
Three-way matching is an important step that triple checks your process and allows you to correct oversights or mistakes.
The reason they call it 3-way matching is because there are three documents involved.
- The Vendor Invoice – A document to tell you what the vendor wants you to pay and the line items they’re billing you for
- The Purchase Order – A document listing out the purchase order number, what you intended to order from the vendor and at what price and correct quantity.
- Receiving Document, Receiving Report, Packing Slip – Although it has many different names, it is a document to tell you what you actually received
Automated Solution to Three-Way Match
If you are finding that your accounting department is being overloaded with manual investigations over lost paper invoices or misplaced packing slips, perhaps its time to look into a three-way matching solution that makes the three-way matching process easier and less time-consuming.
Procurify is a viable solution that allows smaller businesses and growing organizations a way to catch duplicate orders and missed invoices in a centralized platform that is accessible, convenient and manageable.
Understanding Purchase Orders: