Three Way Matching In Accounts Payable 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 matching process provides greater control over spending and helps to prevent fraud.
When an organization receives an invoice from a vendor, the accounts payable department will first check to see if there is a purchase order for the goods or services received. If there is no purchase order, the invoice will be rejected. If there is a purchase order, the accounts payable department will then check to see if there is a receiving report for the goods or services received. If there is no receiving report, the invoice will be rejected.
Only when the vendor invoice, purchase order, and receiving report all match will the invoice be approved for payment. The three-way match is a simple but effective way to control spending and reduce fraud in accounts payable.
