A crucial step in the invoicing workflow is matching the invoice. All businesses have a separate accounts payable team, and they are responsible for the amount that must be settled to their suppliers, vendors, etc. As the business enlarges, there will be many documents to handle, and various processes will also need to be implemented. A crucial process among them is invoice matching. The payment procedure cannot be implemented without the invoice matching process. If you are a business owner and are not aware of what the invoice matching process means, then this blog is for you. Here you can get a clear view of the process of invoice matching and how it works.
What is Invoice Matching?
Invoice matching is the process of comparing the invoices forwarded by the suppliers or vendors with the documents like purchase orders, goods received notes, etc. This comparison process is carried out before the invoice payments are made. It is a confirmatory step carried out by the accounts payable team of the business to validate whether they have invoiced for the correct products that have been received.
Invoice Matching Process:
As the initial process, the business will send a purchase order to the supplier or the vendor by listing all the necessary items needed. The supplier or client verifies it and sends the products requested to the business. When the products are received, the supplier forwards the invoice for the purchase. Now, the role of the accounts payable team comes into existence. They’ll compare the invoice received with two crucial documents. They are
If the data matches in this comparison, then the accounts payable team will proceed with the payment.
The essential components that are checked in the invoice matching process are as follows.
Items received and its quantity
Unit price and total price mentioned
Delivery date
Details on tax amount
Different Types of Invoice Matching:
The invoice matching process can be done with three different methods, and they are mentioned below.
1. Two-Way Matching: The two-way matching process is carried out by comparing the purchase order and the invoice received. This is the simplest way of invoice matching for businesses that do not deal with inventory stocks.
2. Three-Way Matching: The three-way matching process is carried out by comparing the purchase order, goods received note, and the invoice. This method is suitable for businesses that deal with inventory.
3. Four-Way Matching: The four-way matching process is carried out by comparing the purchase order, goods received note, quality report, and the invoice. This method is suitable for businesses that prioritize the quality of their products.
What happens when an invoice doesn’t get matched?
When the invoices don’t get matched with the purchase orders, goods received notes, and quality reports, then payment will be stopped. Then a proper meeting will be scheduled with the suppliers, and clarifications must be made.
Key Benefits of Invoice Matching Process:
The invoice matching process has numerous benefits, and some of them are mentioned below.
The invoice matching process helps in identifying the errors in the invoices as well as the duplicate invoices easily.
It prevents the business from paying wrong payments for products sent.
It assists in building a strong relationship with the supplier or the vendor.
It precludes the fraudulent activities that are to happen.
Performing the invoice matching process manually may look tough. But this process can be made easy with online invoicing software. The cash transaction process for invoices may encounter issues if invoice matching is not completed. So, before making any transaction, perform the invoice matching process and manage your business finance.