Transform Your Business with 3-Way Matching Accounts Payable Process
Is your account payable department less productive these days? Are you worried about invoice fraud and duplicate invoices? Hermes can address those concerns with an automated invoice processing solution with a 3-way matching accounts payable process.
Business growth comes with expanding operations, and these operations can be well managed with 3-way matching in accounts payable. Using the proper accounts payable procedures is essential to a business's success. Process improvement and efficiency lead to better time management and save company costs.
Let us understand what is 3-way matching in accounts payable?
3-way matching is a secured verification technique which you can use to manage business’ AP to ensure that you only pay for goods and services rendered legitimately. This involves taking an invoice for purchased goods, matching it with the purchase order, and receiving information. Comparing purchase orders, receipt notes, and vendor invoices to eliminate fraud and save money.
Three-way matching prevents duplicate or fraudulent invoices that cause the company to pay more than necessary, resulting in financial loss and disruptions to daily operations. This streamlines the accounts payable process to reduce costs, prevent losses and avoid large backlogs.
Automating three-way matching in accounts payable:
When three-way invoice matching in accounts payable is incorporated, an organization can automatically reconcile a large sum of invoices. This means the invoices will run straight through the accounts payable process without manual intervention, thus saving employee time and reducing errors.
How does it work?
A 3-way matching is an essential account control that companies use to ensure invoices are paid only when the documents are correctly validated. It tracks the purchase order, supplier invoice, and goods receipt. You don’t have to do this manually. Hermes automates the process by handling invoice variations more effectively and quickly.
Accounts payable scrutinizes the details of each of the three documents, verifying that the product received matches what was ordered. Let us have a look at the process and the significance of the matching process:
- Invoice: this constitutes a request for payment from a vendor to a buyer. The invoice includes the essential information to facilitate the sale, including a unique invoice number, vendor contact details, applicable credits or discounts, and the total amount due.
- Order receipts: these are included with delivered goods to details which goods have been included in shipment as well as payment method.
- Purchase orders: an official confirmation receipt of the order sent to the vendor from the buyer. This document authorizes the purchase, including PO number, payment information, and description of goods and services sold and quantity.
3- way matching accounts payable highlights discrepancies or inconsistencies between any of the critical documents. This helps detect issues or errors such as incorrect prices or damaged products, and payment will be withheld pending issue reconciliation. The invoice has been validated via 3-way matching.
What are the benefits of a 3-way matching accounts payable?
There are several important reasons why business owners are shifting to adopt 3-way matching accounts payable. Let us have a look at the below benefits:
- Improve supplier relationship: suppliers and vendors play a significant role in verified data. A good relationship with a supplier can lead to preferential pricing and improved credit terms.
- Improve profitability: 3-way matching accounts payable process positively impacts the business bottom line. Verifying data helps in protecting the business against overpaying, making duplicate payments, or fulfilling fraudulent invoices.
- Prepares finances for audits: POs, GRNs, and invoices are the most common documents auditors require. When these documents are correctly approved, matched, and organized, the audit process becomes seamless and won't take much employee time. Accurate data is useful for auditors looking to pinpoint financial inconsistencies.
- Protects against fraudulent and duplicate payments: 3- way invoice matching means that data is verified accurately throughout the procedure. The verification procedure protects against fraudulent or non-authorized purchases. Having close tabs on POs, GRNs and invoices ensure that organizations are not overpaying or paying for duplicate items or invoices.
Why should you automate the matching process?
Automating the matching accounts process helps save time, money, and resources. Shifting to a digitized process ensures promptness in payments, accuracy in encoding data, and accessibility on different platforms. AP automation reduces 80% of the accounting department’s workload without employing additional staff.
Automated matching processes reduce time spent on tasks; this generates and sends invoices automatically without errors, backlogs, and delayed payments.
Automation Solution for the Matching process:
Technology integrated AP automation is an innovative and efficient solution for an organization that wishes to minimize workload and maximize employee productivity. Hermes is a simple, powerful solution to automate the 3-way matching accounts payable process. Hermes handles all invoice variations faster and more effectively.
The bots in Hermes can adapt to any invoice they encounter and digitize the entire workflow to save time and cut costs. They thoroughly check supplier invoices, purchase orders, and goods receipt notes and cross-verify them to prevent misfiling and fraud. Hermes also authenticates purchase transactions to reduce delays in approving invoices.
Hermes applies the 3-way matching accounts payable process to streamline the AP flow and automate the system. It reduces your financial department’s liability while encouraging a paperless process and increasing productivity. If you’re interested, book a demo and learn how Hermes can automate your AP process.