A vital step in the invoicing workflow is invoice matching. All businesses have a separate accounts payable team responsible for settling amounts to their suppliers, vendors, etc. As a business expands, document management becomes more complex, and various processes need to be implemented. One such crucial process is invoice matching. The payment procedure cannot proceed without the invoice matching process. If you are a business owner and are not familiar with the invoice matching process, this article is for you. Here, you can gain a clear understanding of the invoice matching process and how it works.
Invoice matching is the process of comparing the invoices sent by suppliers or vendors with documents like purchase orders, goods received notes, etc. This comparison process is carried out before making invoice payments. It is a confirmatory step performed by the accounts payable team of the business to verify whether they have been invoiced for the correct products that have been received.
The invoice matching process begins with the business sending a purchase order to the supplier or vendor, listing all the necessary items needed. The supplier or client verifies it and sends the requested products to the business. When the products are received, the supplier sends an invoice for the purchase. The accounts payable team then compares the received invoice with two crucial documents - the Purchase Order (what is requested) and the Goods Received Note (what is received). If the data matches in this comparison, the accounts payable team will proceed with the payment.
The key components checked in the invoice matching process are:
1. Items received and their quantity
2. Unit price and total price mentioned
3. Delivery date
4. Details on tax amount
The invoice matching process can be done using three different methods:
1. Two-Way Matching: This process involves comparing the purchase order and the received invoice. This method is ideal for businesses that do not deal with inventory stocks.
2. Three-Way Matching: This process involves comparing the purchase order, goods received note, and the invoice. This method is suitable for businesses that deal with inventory.
3. Four-Way Matching: This process involves comparing the purchase order, goods received note, quality report, and the invoice. This method is suitable for businesses that prioritize the quality of their products.
If the invoices do not match with the purchase orders, goods received notes, and quality reports, the payment will be halted. A meeting will then be scheduled with the suppliers to seek clarifications.
The invoice matching process offers numerous benefits:
1. It helps in identifying errors in the invoices as well as duplicate invoices easily.
2. It prevents the business from making incorrect payments for products sent.
3. It assists in building a strong relationship with the supplier or vendor.
4. It prevents fraudulent activities.
Performing the invoice matching process manually may seem challenging. However, this process can be simplified with online invoicing software. The cash transaction process for invoices may encounter issues if invoice matching is not completed. Therefore, before making any transaction, perform the invoice matching process to manage your business finance effectively.
Invoice matching is the process of comparing the invoices sent by suppliers or vendors with documents like purchase orders, goods received notes, etc. This comparison process is carried out before making invoice payments. It is a confirmatory step performed by the accounts payable team of the business to verify whether they have been invoiced for the correct products that have been received.
The invoice matching process begins with the business sending a purchase order to the supplier or vendor, listing all the necessary items needed. The supplier or client verifies it and sends the requested products to the business. When the products are received, the supplier sends an invoice for the purchase. The accounts payable team then compares the received invoice with two crucial documents - the Purchase Order (what is requested) and the Goods Received Note (what is received). If the data matches in this comparison, the accounts payable team will proceed with the payment.
The key components checked in the invoice matching process are:
1. Items received and their quantity
2. Unit price and total price mentioned
3. Delivery date
4. Details on tax amount
The invoice matching process can be done using three different methods:
1. Two-Way Matching: This process involves comparing the purchase order and the received invoice. This method is ideal for businesses that do not deal with inventory stocks.
2. Three-Way Matching: This process involves comparing the purchase order, goods received note, and the invoice. This method is suitable for businesses that deal with inventory.
3. Four-Way Matching: This process involves comparing the purchase order, goods received note, quality report, and the invoice. This method is suitable for businesses that prioritize the quality of their products.
If the invoices do not match with the purchase orders, goods received notes, and quality reports, the payment will be halted. A meeting will then be scheduled with the suppliers to seek clarifications.
The invoice matching process offers numerous benefits:
1. It helps in identifying errors in the invoices as well as duplicate invoices easily.
2. It prevents the business from making incorrect payments for products sent.
3. It assists in building a strong relationship with the supplier or vendor.
4. It prevents fraudulent activities.
Performing the invoice matching process manually may seem challenging. However, this process can be simplified with online invoicing software. The cash transaction process for invoices may encounter issues if invoice matching is not completed. Therefore, before making any transaction, perform the invoice matching process to manage your business finance effectively.