Three-Way Matching Automation: Transforming AP Controls

Three-way matching is a fundamental accounts payable control, and one of the most tedious manual processes in finance. For every invoice, AP teams must locate the purchase order, find the receiving report, and verify that quantities and prices align before authorizing payment.

Three-way matching software automates this entire workflow, using AI to extract document data, apply matching rules, and surface only true exceptions for review.

The Manual Matching Problem

In traditional AP departments, three-way matching looks like this:

1. Invoice arrives (by email, mail, or portal)
2. AP clerk searches for the original PO
3. Clerk locates the goods receipt or receiving report
4. Line-by-line comparison of quantities and prices
5. Investigation of any discrepancies
6. Approval routing and payment scheduling

Time and Cost

Manual three-way matching consumes significant resources:

• 5-15 minutes per invoice for matching and verification
• Hours lost chasing down missing POs or receipts
• Delayed payments straining vendor relationships
• Overtime during month-end to clear invoice backlogs

For organizations processing thousands of invoices monthly, this adds up to multiple FTEs dedicated solely to matching.

Error and Fraud Risk

Manual processes introduce risk:

• Duplicate payments when the same invoice is processed twice
• Overpayments when quantities or prices aren't verified
• Fraudulent invoices slipping through without PO validation
• Pricing errors going undetected in high-volume scenarios

Three-way matching exists to prevent these issues—but only when it's actually performed consistently.

AI-Powered Three-Way Matching

Modern three-way matching software transforms this control from a bottleneck into an automated checkpoint.

Document Ingestion

NAYA captures invoices from any source:

• Email: Automatically extract invoices from AP inbox
• Portal: Integrate with vendor portals and EDI
• Scan: Process paper invoices via OCR
• API: Receive structured data from procurement systems

Intelligent Extraction

AI extracts key fields from every document:

• Vendor name and address
• Invoice number and date
• PO reference numbers
• Line items: descriptions, quantities, unit prices
• Tax, shipping, and total amounts

The system handles variations in invoice layouts, terminology, and formatting.

Automatic Matching

With PO data from your ERP and receipt data from your warehouse system, NAYA applies matching rules:

Exact Match

• Quantity invoiced = Quantity received = Quantity ordered
• Unit price invoiced = Unit price on PO
• Total amounts align within tolerance

Tolerance-Based Match

• Configure acceptable variances (e.g., ±2% or $50)
• Auto-approve within tolerance
• Flag items outside tolerance for review

Partial Match

• Track cumulative receipts against PO
• Match partial invoices to partial shipments
• Maintain running balances per PO line

Exception Management

When matches fail, NAYA provides:

• Clear exception reason: Price variance, quantity mismatch, missing receipt
• Full context: Original PO, all receipts, invoice history
• Suggested resolution: Prior similar resolutions, common patterns
• Workflow routing: Send to buyer, receiving, or AP manager based on type

Key Capabilities

Configurable Matching Rules

Define rules that match your business:

• Tolerance thresholds by amount, percentage, or item category
• PO-required vs. non-PO invoice handling
• Service invoice matching (no receipt required)
• Blanket PO and contract matching

Multi-Entity Support

Handle complexity across your organization:

• Match invoices to POs across legal entities
• Support shared services and centralized AP
• Maintain entity-specific approval workflows
• Consolidate reporting across the organization

Approval Workflows

Route exceptions efficiently:

• Rule-based routing by variance type and amount
• Escalation for aged items
• Mobile approval for managers
• Audit trail of all approvals

ERP Integration

Connect to your existing systems:

• Pull PO data from NetSuite, SAP, Oracle, Dynamics
• Push approved invoices for payment
• Sync vendor master data
• Post GL entries automatically

Results and Impact

Organizations implementing three-way matching automation see:

• 75% reduction in AP processing time
• 95%+ straight-through processing for matched invoices
• Near-zero duplicate payments
• Improved vendor relationships through faster payment
• Audit-ready documentation for every transaction

Beyond Matching: Complete AP Automation

Three-way matching is one component of accounts payable automation. NAYA extends to:

• Invoice capture and data extraction
• Coding and GL account assignment
• Approval workflow automation
• Payment execution and remittance
• Vendor management and communication

Learn more about three-way matching fundamentals and explore the NAYA platform.

Schedule a Demo