What is Invoice Matching?
Invoice matching is the comparing and linking of a supplier invoice with the underlying data on which the cost is based, such as a contract or purchase order (PO). Usually companies will perform a 2 or 3 way match. A two way match compares the invoice amount to the corresponding PO. If the amounts for those items match than the invoice can be paid without further action. In a 3 way match, the invoice is generally compared to the PO as well as to a receiving document or a contract. Again, if there is a match no further action is necessary. Matching invoices manually is time-consuming, especially on a line level where each invoice row needs to be matched to a PO and/or receiver or contract. It can also occur at the header level where the invoice total is matched vs. each line item.
Why is it Important?
Invoice matching is crucial to efficient and accurate financial management. By meticulously comparing purchase orders, invoices, and goods received notes, organizations can safeguard against a multitude of financial risks. This process ensures that payments are made only for legitimate and authorized purchases, preventing fraudulent activities and unauthorized spending. Additionally, it helps maintain precise financial records, aids in tax compliance, and streamlines the audit process. It also detects discrepancies in quantities, prices, or product descriptions, enabling timely resolution and preventing overpayments or shortfalls. Ultimately, invoice matching enhances operational efficiency, improves cash flow management, and strengthens supplier relationships by demonstrating financial integrity and reliability.
Implementing a Accounts Payable Automation (AP) solution along with a Vendor Portal can dramatically reduce the time and resources involved with invoice matching. Contact ICG today for a demo or more information on our AP Automation and vendor portal and supplier portal solutions.