What Is 3-Way Matching in Accounts Payable?
Three-way matching is the process of comparing three documents before paying a supplier invoice: the purchase order (what you ordered), the supplier invoice (what they are charging), and the delivery note or goods receipt (what you actually received). If all three match — quantity, price, and items — the invoice is approved for payment. If any one differs, the discrepancy is investigated before money leaves.
The purpose is to prevent three errors: paying for goods you never received, paying a price higher than agreed, and paying for a quantity different from what was delivered. It is standard practice in businesses with physical inventory and formal purchase orders. An AI employee like Nika does not perform the full three-way match — that requires judgment about what was actually delivered — but she does enter every incoming invoice the day it arrives, from $0.40 per processed invoice, so the data needed for matching is available immediately.
Not every invoice needs a three-way match. For low-value, recurring, or trusted suppliers, many businesses use two-way matching (invoice against purchase order) or simply approve below a threshold. The decision of which invoices to match is an internal control policy set by management and your accountant. The key is consistency: whatever the policy, it should be applied to every invoice, not just the ones someone remembers to check.
Related questions
When is 3-way matching not necessary?
For low-value purchases, recurring subscriptions, or trusted suppliers where the cost of the matching process exceeds the risk of error. Many businesses set a threshold below which invoices are approved without a full match, and reserve three-way matching for higher-value or new suppliers.
Does AI do 3-way matching automatically?
Not the full match. The AI employee can enter and file the invoice and delivery note the same day, making the data available for matching — but the judgment of whether what arrived matches what was ordered remains a human decision, typically handled by the person who placed the order or your accountant.