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Intelligent 3 Way Match Handles Exceptions Exceptionally Well

Most companies do some form of matching of vendor invoices to purchase orders and/or goods receipts. This is called a two or three way match.

The process can require a great deal of manual effort, particularly if the invoiced items have to be matched at the line level.

Once an invoice is entered into an ERP it is assigned a “match/no match” status. If for any reason there are price differences or problems with the goods receipt, the invoice cannot be processed by the ERP. Users or knowledge workers typically have to cancel the transaction, and then perform time-consuming manual work to clear the exception. This usually involves the purchaser, the receiver and sometimes the vendor.

ERPs do not have an automated way of handling these exceptions and in many cases companies may spend days trying to clear up the differences between purchase orders and invoices.

Procurement software companies claim they can “automatically match” these documents – but what makes that possible?

That’s where Intelligent 3 Way Match can make a difference—especially when exceptions occur!

3 way match

Intelligent 3 Way Match Handles Two or Three Way Matching, Non-POs and Exceptions

First, let’s get up to speed:

  • Paper and emailed invoices are intelligently scanned, and their data fields captured. The technology recognizes each invoice by vendor and collects all of the essential information, regardless if the format is regular paper, PDF, xml, Word documents, or otherwise.
  • Purchase Order data is generated within the ERP, an external requisitioning system or a blend of both.
  • Goods receipts are imported if they are already entered into the ERP, or users register them electronically in order to process them.……………………

All of this information is visible in one intuitive, user-friendly dashboard.

Secondly, in most companies accounts payable staff do not have the data or knowledge of the purchase to be able to clear an exception.

This is where the manual process slows things down.

Whereas the AP staff member might not have the information at hand, Intelligent 3 Way Match isolates the problem that is preventing a proper match.

Using PO and goods receipt data, Intelligent 3 Way Match determines a proper workflow by identifying the purchasing specialist or other knowledge workers who have the authorization to address the exception, and delivers them a “package” of information—including an email alert.

Palette’s AP Automation Suite includes Automated 2 and 3 Way Matching, read more about that here.

2 and 3 way match

Efficient mobile approvals

Once delivered, the recipient views the package of information which includes an invoice image, a copy of the PO, the goods receipt information, and a description of the error. This package of information is presented in a single dashboard on the recipient’s laptop or mobile device. It gives the knowledge worker all the tools and services they need to manage the exception, such as ad-hoc routing capabilities to colleagues and email and/or portal communications with vendors.

When the knowledge worker is done, they can return the corrected invoice package through the dashboard back to the matching engine, clearing the exception.

As well, all of these steps (including the communications) are tracked and recorded, creating an audit trail visible to auditors and regulators.

What about companies with a large volume of non-PO invoices? 

The non-PO invoice arrives with no accounting data on it, and no PO to assign the account codes from. To handle this, intelligent scanning technology classifies each invoice when it captures the data. It asks the following:

  1. Is there a PO number in the data set? If so, the system sends it into the 2 or 3 way matching process.
  1. Is there a contract number present? If that is the case, the invoice is sent through a matching process specifically for contracts.
  1. No PO number or contract number? The system uses a piece of reference data (as predetermined by the end user) from each invoice and automatically routes that invoice to the appropriate person for validation, approval or exception handling.

Intelligent 3 Way Match can greatly shorten the payment cycle and improve the productivity of all the users in an organization. See how it fits in with Palette’s AP Automation solution here

Print or share Publish date: 2017-04-25