How an invoice matching system can transform your 3-way matching process

Manual 3-way matching, the traditional process of comparing Purchase Orders (POs), Goods Receipt Notes (GRNs), and invoices, has been a foundational aspect of Accounts Payable (AP) management. While this approach is essential for ensuring accuracy, it often becomes a time-consuming and costly burden when performed manually.

By automating 3-way matching, businesses can streamline their AP operations, reduce human errors, enhance cash flow, and cultivate stronger supplier relationships. In this article, we'll delve into the common challenges of manual invoice matching and explore how adopting automated 3-way matching can transform your AP invoice processes, driving efficiency and profitability.

The challenges of manual 3-way matching 

A 3-way matching process has the potential to be a game-changer but a lot depends on how it is implemented or executed. In manual AP ecosystems, the process of comparing PO, GRN, and invoice documents can easily become burdensome, and give rise to numerous inefficiencies. The main challenges are:  

• Time-consuming. Imagine manually comparing thousands, even millions, of invoices against Purchase Orders and delivery receipts, line by line. This tedious process takes up valuable time that could be better spent on strategic tasks. Delays in processing invoices due to manual matching can also result in late payments, strained supplier relationships, and a roadblock for business growth.

• Error-prone. Even the most meticulous employee makes mistakes, especially when dealing with repetitive tasks and large volumes of data. Inconsistencies in data formatting, typos, or misinterpretations can easily lead to errors in manual matching, resulting in overpayments, underpayments, missed discounts or invoices, and fraudulent payments slipping through the net.

• Increased processing costs. The time and resources dedicated to manual matching translate to higher operational costs, which could be better invested in automation technology. 

The bottom line: manual 3-way matching simply doesn’t scale, which in the end leads to financial risk. Embracing automation and streamlining your 3-way matching process is crucial for ensuring smooth operations, protecting your finances, and improving your cash flow. 

Three steps to get started with automating your 3-way matching process

Your AP transformation won’t be optimal if it does not include 3-way matching for the PO process. This is why, in our final section, we signpost what you need to consider before committing to your automation journey. Spoiler alert: you need the right AP Invoice Automation solution to automate the right standardized processes, now and in the future. 

But we should unpack this sentence. The choice of solution is paramount so let’s start there.

1. Select an AP Automation solution that meets the needs of your organization

Choose a solution that automatically imports invoice data, compares documents and data, and flags discrepancies. A related feature we referred to earlier is the integration with ERP systems to ensure a smooth data flow. Also, your automated 3-way matching processes should accommodate rules that reflect specific business needs. Is the tool in your sights capable of delivering that? And finally, you’ll want to ensure that your AP automation tool can configure workflows for the automated routing of invoices for approval and establish clear channels for exception handling.

At Cevinio, we can help you tick all these boxes and more; for example, we can also trigger reminders and escalations to make sure that invoices that are held up in the system (possibly because of holidays or illness) are still approved in a timely fashion. We invite you to explore our solution and discover how.

In contrast to the challenges of a manual 3-way matching process, we offer the benefits of an automated one: 

• Cost savings through preventing errors via automation and matching capabilities. 

• Improved supplier relationships and trust. 

• Compliance with regulatory requirements. 

• Accurate payments. Our solution ensures you pay the right amount, for the right goods, to the right supplier. 

• Fraud prevention. Detects and flags suspicious invoices before they get paid. 

• Business process and approval workflow. 

• Improved cash flow.  Streamlines processing, leading to faster payments and better financial management. 

• Stronger supplier relationships. Fosters transparency and trust with accurate and timely payments.
• Process refinement. Analytics Suite to spot inefficiencies, root causes and make data-driven decisions.

2. Standardize your invoice process

When companies decide to transform their invoice processing using AP Automation software, one of the questions they ask themselves is: “Should we automate our AP processes as they are, or should we try to standardize first?” A combined approach is in most cases a pragmatic solution. When standardization and automation go hand-in-hand, they achieve streamlined processes and leverage cutting-edge technology faster.  

As part of this effort, it is paramount you map your current invoice process, involve the right people from the relevant departments from the beginning, and review master data and the definition of rules, thresholds, and other business requirements.

3. Put in place AP continuous improvement mechanisms

There are different steps you can take to ensure your 3-way matching process is a success today and in the future. 

• Leverage the power of data analytics to monitor performance. Regularly assess the effectiveness of your processes, teams, and vendors to identify areas for improvement. 

• Seek feedback. Encourage evaluations from stakeholders involved in the process to identify pain points and optimize the invoice process. For example, you can regularly ask the master data team, logistics, or approvers, about their experience with the process and way of working. 

• Communicate with vendors. Clearly explain your 3-way matching process and data requirements to ensure accurate invoices from the beginning. 

• Empower your team. Train your team on the solution and the new way of working to empower them to process invoices and handle exceptions efficiently when they occur.

Transform with Cevinio's AP Invoice Automation

Cevinio’s AP Automation solution supports your journey towards efficient and future-proof AP operations providing key features such as invoice data matching, so we adjust to your business needs. When using our solution, you will benefit from advanced approval and business process workflows, ERP-agnostic connectivity, data analytics dashboards, and much more.

To find out how Cevinio can help you automate your 3-way matching process and transform your AP processes across the board, please get in touch