Definition
A three-way match is an accounts payable control in which a business compares the purchase order, the receiving record, and the supplier's invoice before paying. Quantities, prices, and terms must agree on all three. If they do not match, the invoice is held until the difference is resolved, which protects against overbilling and paying for undelivered goods.
Also called: 3-way match, Three-way matching, Two-way match
Three-way match in practice
Large companies often run three-way matching automatically. If your invoice does not quote the PO number, uses a different unit price or unit of measure, or bills more items than the receiving team recorded, it will typically be put on hold without anyone telling you.
To get paid on time by these clients, copy the PO number, line descriptions, units, and prices exactly from the purchase order, and invoice only what has been delivered. If the order changed, ask the client to amend the PO before you invoice.
A two-way match compares only the PO and the invoice and is common for services, where there is no physical delivery to record.
Example
A PO is for 100 cartons at $12. The warehouse receives 96, and the supplier invoices 100. The match fails, and the client pays for 96 only after the supplier issues a corrected invoice.
Frequently Asked Questions
Why is my invoice stuck in a client's approval process?
Often because it does not match the PO or receiving record. Check the PO number, quantities, unit prices, and tax against the PO, and ask the client's accounts payable team what failed.
Do service invoices go through three-way matching?
Usually a two-way match against the PO, sometimes with a manager's approval or approved timesheet standing in for the receiving record.
Related terms
- Purchase order A purchase order is a document a buyer sends to a supplier to formally request goods or services at agreed prices, quantities, and delivery dates.
- PO number A PO number is the unique identifier on a purchase order that a buyer issues before a sale.
- Packing slip A packing slip is a document included in a shipment that lists the items and quantities inside the package.
- Accounts payable Accounts payable is the total amount a business owes to its suppliers for goods and services received but not yet paid for.
- Invoice approval Invoice approval is the process a buyer uses to check and authorize a supplier's invoice before it is scheduled for payment.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.