Three-way matching compares three documents before a payment is released: the purchase order (what the buyer agreed to buy), the goods received note or delivery note (what actually arrived), and the invoice (what is being charged). Where all three agree, the invoice is approved. Where they disagree, it goes to an exceptions queue for a human to investigate.
It exists to prevent paying for goods never received, paying twice, and paying prices nobody agreed. It is standard practice in any organisation with a procurement function.
Why It Matters
For a supplier, three-way matching is the invisible reason invoices sit unpaid. A mismatch does not usually generate a rejection email — it generates a queue entry that waits for someone with other priorities. That is why quoting the purchase order number on every document, and invoicing what was delivered rather than what was ordered, does more for payment speed than chasing does.
Example
A purchase order covers 100 units at £10. The delivery note records 100 received. The invoice bills 100 at £10. All three agree, so the invoice is approved automatically. Had the invoice said £11, the whole payment would have stopped over the £100 difference until someone resolved it.
Frequently Asked Questions
What is two-way matching?
The purchase order checked against the invoice, with no receipt evidence. It is common for services, where there is nothing physical to receive — the equivalent control is usually a manager’s approval that the work was delivered.
How do I stop my invoices failing the match?
Quote the purchase order number on the invoice, bill what was actually delivered, handle shortages with a documented back-order or credit note, and align your invoice lines to the purchase order lines rather than restructuring them.