Three Way Matching For Accounts Payable Definition
Three Way Matching For Accounts Payable Definition:
In accounting, three-way matching is a process used to reconcile the differences between the amounts invoiced by a vendor, the amount received from the vendor, and the amount paid to the vendor. The goal of three-way matching is to ensure that all three amounts match so that there are no discrepancies between what was invoiced, what was received, and what was paid.
To reconcile these differences, businesses must keep track of their accounts payable records, which includes invoices from vendors, purchase orders, and receipts. Once a business has received an invoice from a vendor, they will compare it to the corresponding purchase order to make sure that the invoice matches what was ordered. If there are any discrepancies, they will need to be reconciled before the invoice can be approved for payment.
Once an invoice has been approved for payment, businesses will then compare it to the corresponding receipt from the vendor. This is done to confirm that what was invoiced was actually received by the business. If there are any discrepancies between the two documents, they will need to be reconciled before payment can be made.
The three-way matching process may seem like a lot of work, but it is essential for businesses to do in order to avoid overpaying or underpaying their vendors. By ensuring that all three documents match up – the invoice, purchase order, and receipt – businesses can be confident
