Automating Accounts Payable Workflows with Matching Mechanisms
Maintaining efficiency in accounts payable while keeping records accurate reduces half of a company’s problems. Companies with inefficient Accounts Payable can significantly damage the business cashflow, resulting in unpaid payments, and poor vendor relationships. Tracking a stack of missed invoices and purchase orders can be racking.
Matching invoices with purchase orders (POs) helps ensure the company pays for what it ordered and received. But what happens when a company skips some matching steps? These are the common problems account departments face.
This blog talks about 2-way, 3-way, and n-way matching mechanisms and how it helps businesses.
The process involves comparing an invoice to a purchase order (PO) to ensure they align. The matching mechanism involves 2-way,3-way and n-way matching.
Matching Mechanisms in Accounts Payable
2 Way Matching
2-way matching in accounts payable is the method of checking whether the data on the purchase orders match with the data on invoices. 2-way matching processes invoices the faster way by comparing the specified criteria with invoices and purchase orders.
3 Way Matching in Accounts Payable
3-way matching mechanism validates and matches the data with the purchase order, invoice, and sales receipt.The following are some pointers how 3-way matching helps businesses:
- Increased Accuracy: While verifying three documents, there is a higher chance of finding errors or discrepancies in pricing, quantities, or descriptions. It helps avoid over payments and confirms you only pay for what you ordered or received.
- Improved Fraud Prevention: Three-way matching helps to find more efficient ways of fraudulent invoices that may not show actual purchases or deliveries.
- Stronger Internal Controls: The well-defined matching process shows strong internal controls, which can be necessary for audits or compliance.
n-way Matching Mechanism
The n-way matching mechanism is where the PO, invoice, and receipt orders match every parameter involved throughout the verification process. This can help prevent fraud and errors, making the invoice process seamless.
Benefits of 2-way, 3-way and n-way Matching Mechanisms
- Avoids over payment: The matching process reduces the risk of overpaying a vendor and safeguards businesses from unnecessary expenses. It also confirms that maintaining accurate data saves time and money.
- Helps in auditing: The matching process makes auditing and bookkeeping easier. Complete documentation helps to keep the purchasing process transparent.
- Builds strong supplier relations: The matching process improves and strengthens supplier relations by making payments on time.
- Improved Accuracy: With AP software, the invoice data is compared against enterprise resource planning (ERP), making it easy to detect duplicate/ fraud payments easily. As every invoice can be imported, you don’t have to input invoices, reducing the likelihood of human error manually.
- Easy auditing:Automation helps with the auditing processes as it can easily link all documents and messages involved with each transaction while matching invoices with receipts and purchase orders.
- Accuracy:Automation maintains accuracy by reducing human errors and discrepancies with predefined algorithms.
- Efficiency:Automation helps streamline invoice settlement with POs and fasten the invoice processing workflow.
- Cost Savings:Cuts down the cost of manual labor required in the matching process to reduce operational costs associated with the task.
Automated systems can transform business processes compared with manual processes. Choosing the right AP solutions minimizes the manual work required of your employees and reduces natural human errors. With unique features such an intelligent matching mechanism, fraudulent or duplicate invoicing, and easy payment methods, SutiAP acts as a problem solver.With SutiAP solution, you can eliminate the burden of your accounts payable team, allowing more time to focus on crucial tasks.
