Three Way Matching Accounting Definition

The three way match is a process used in accounts payable to ensure that the vendor invoice, purchase order, and receiving report agree before payment is made. This process helps to prevent over- or under-payments, and can also help to catch errors such as incorrect pricing.

To perform a three way match, the accounts payable department will first compare the vendor invoice to the purchase order. The invoice should match the purchase order in terms of the items or services purchased, as well as the price. If there are any discrepancies, they will need to be resolved before payment can be made.

Next, the accounts payable department will compare the vendor invoice to the receiving report. The receiving report should confirm that the items or services were actually received, and that they match what was ordered in terms of quantity and quality. Again, if there are any discrepancies, they will need to be resolved before payment can be made.

Finally, once both the purchase order and receiving report have been confirmed, payment can be made to the vendor. This final step helps to ensure that only invoices for goods or services that have actually been received and accepted are paid.