Accounting technology / Glossary / Three-way match

What is a three-way match?

Definition

A three-way match is an accounts payable control that checks a supplier invoice against two other documents before it is paid: the purchase order, which shows what was ordered and at what price, and the goods received note, which shows what arrived. The invoice is paid only when quantities and prices agree within set tolerances.

Also called3-way matchthree-way matching

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Compares: Invoice, purchase order, goods receipt
Two-way match: Invoice and purchase order only
Category: AP, AR and payments

How three-way matching works

The check runs line by line. Quantity invoiced is compared with quantity received, and price invoiced with price ordered. Most companies set tolerances, such as a small percentage or a fixed amount, so rounding and minor freight differences do not stop an invoice. Anything outside tolerance becomes an exception: the buyer or receiver confirms the difference, the supplier issues a credit note, or the purchase order is amended. A two-way match compares only the invoice and purchase order and suits services, where there is no delivery to record; a four-way match adds an inspection or acceptance record. Procurement and AP software runs the match as invoices arrive, so the team works on exceptions rather than on every invoice.

Common questions

What is the difference between two-way, three-way and four-way matching?+

Two-way compares the invoice with the purchase order. Three-way adds the goods received note. Four-way adds an inspection or acceptance record. Each extra document gives more assurance and adds a step.

What happens when a three-way match fails?+

The invoice is held as an exception. Someone checks whether goods were short-delivered, the price changed or the invoice is wrong; then the receipt is updated, the purchase order amended or a credit note requested before payment.

Is three-way matching required?+

No law requires it. Companies use it to avoid paying for goods they did not order or receive, and auditors test it as one of the main controls over purchases.