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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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3–9. Automate Three-Way Matching

The three-way matching process is a manual one at most companies; that is, a clerk matches a supplier invoice to a company purchase order and a receiving document in order to ensure that the correct quantities (and costs) ordered are the same ones received and billed. This is a painfully slow and inefficient process, given the large number of documents involved, as well as the startling number of exceptions that nearly always arise.

There are two ways to solve the problem. One is to dispense with three-way matching entirely, which requires considerable reengineering of the accounts payable process, as well as retraining of the receiving staff and even of suppliers. This process was described in detail in the “Pay Based on Receiving Approval Only” section earlier in this chapter. Though the most elegant solution, it also requires the most work to implement.

The second solution requires some software changes that may already be available in the existing software package, with minimal changes to employee procedures, while still resulting in efficiency improvements (though not on the scale of the first solution). This best practice involves keeping the matching process in its current form, but using the computer system to perform the matching work. In order to automate three-way matching, all three documents must be entered into the computer system. This is easy for purchase orders, since most companies already enter purchase orders directly into the ...

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