Learn what an automated 3 way invoice matching is & how it can be useful during accounting.
When it comes to invoicing, businesses have a few different options as to how they want to handle the process. One common method is 3-way invoice matching, which involves elements - purchase order (PO), invoice, and goods receipt (GRN) note. The process of matching all three before releasing the payment to the supplier is the core of this concept.
3-way invoice matching helps accounting determine if the invoice should be in entirety or in parts and eliminate the risks of later resorting to reimbursement or even unauthorized purchases. Here we will discuss what 3-way invoice matching is in detail, how it works, and some of the benefits and challenges associated with it.
Before we jump into the concept of 3-way invoice matching, let's briefly understand the 3 elements involved in this process.
PO is a document generated by the Buyer to be share with Seller that specifies the details of an order. Typically a PO document would include an invoice number quantity, Product/services being ordered, specifications on the product/services, date of delivery, billing and delivery address, details on the payments, etc.This also symbolizes the buyers commitment to pay upon goods received.
This document is generated by the Inventory division of the buyer/customer. Once the seller delivers the order, based on the goods received the details are furnished in the Goods Receipt note.
In simpler terms this is the bill for payment for all the services/products delivered based on the Purchase Order (PO). This document is generated by the Seller.
Now that we understand the manual efforts required to achieve the 3-way matching and why this is required, the common problem that organizations are facing is implementation of this technique at scale without compromising on speed and growth.
This is where an Document Processing Automation can help. Intelligent Document Processing (IDP) is an AI based technology that is designed to handle complex workflows involved in a document journey. Organizations have to use IDP to customize their workflow. We will walk you through how to get this done using VisionERA IDP.
Since there is a workflow associated with this, you can go into VisionERA custom workflow manager and connect the sources for purchase orders, goods delivery note, invoices. You have the option to do it via upload or by connecting to an API. Alternatively you can also send it over email to our data processing official email id (listed on the platform screen).
After the upload, all the invoices you have received from your vendors/sellers are fed into the system. VisionERA IDP should be able to identify all the data like the invoice number, amount, goods delivered, etc. from these scanned document and displayed for your verification.
After you have verified the information,you can proceed to the next step wherein the visionary IDP connects with the relevant purchase order to verify all the data that's being added into the invoice raised. If all the data points like quantity, amount, model numbers, date of delivery, etc match, IDP will go ahead and connect with the GDN (goods delivered note) to verify the details on the Goods mentioned in the purchase order.
If everything looks good, the invoice will be marked verified. This verified invoice will be sent to Account Payables via inbuilt integrations for further action.
With this system in place, organizations will be able to automatically reconcile large volumes of invoices in a matter of minutes. This means that accounts payables will start receiving the final processed and verified invoices without any manual intervention.
If the IDP comes across any non-understandable format of invoice, manual intervention would be required to help the AI understand the data. Once this process is completed, AI learns this new document and processes the entire batch in the same format with ease.
This entire process is pretty straightforward so that organization can plug and play.
The VisionERA IDP platform is designed to be flexible enough to accommodate complex requirements while enabling you to scale. However, since we are talking about why to consider VisionERA IDP for 3-way invoice matching, here are 3 golden reasons:
When you verify that the data is consistent across purchase orders, goods received notes and invoices it prevents overpaying for products as well paying out duplicate bills. It also keeps tabs on when payments should go to prevent invoice fraud which could save thousands or millions in losses!
Invoices and receipts should be treated with the utmost care. They represent an important document that reflects your business's financial standing, which is why it deserves special treatment in any process involving accounts payable or receivables! Having trouble with these document handling can pose serious issues with vendor relationships and organizations that rely highly on their vendor’s quick response and delivery, having an automation system is an absolute must.
Enterprises are always on high alert for any financial discrepancies when it comes to payments and purchases. Receipts help protect against rigorous auditing processes, while up-to date invoices ensure the integrity of your business's transactions with outside sources like suppliers or vendors.
In order words three way matching can provide transparency in all aspects related workflows which eventually leads towards an efficient use of budgeting time as well a lower risk factor overall.
The future of your accounts payable department is now, with intelligent document automation. With tools like VisionERA’s powerful and easy to use document automation you can automate all aspects or business transactions in one spot while eliminating double payments, preventing fraud and keeping vendors happy - saving time & money too!
P.S: If you found this 3-way matching interesting, you should also explore 2-way and 4-way matching. You will be able to make a better decision based on your business requirement and the complexity involved.
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