Three-way matching compares a supplier invoice with the agreed purchase order and the receiving record before approval to pay. It helps identify quantity, price and receipt discrepancies. It is a control process, not a promise that an invoice is correct whenever three numbers happen to agree.
The three records
| Record | What it establishes |
|---|---|
| Purchase order and accepted changes | The items, quantities, prices and terms agreed with the supplier |
| Goods received note | What was delivered, accepted, rejected or left unresolved |
| Supplier invoice | What the supplier requests payment for |
Keep original and revised order values distinguishable. A supplier's proposed price change is not automatically an approved revision. The receiving record should also preserve who recorded the receipt and when.
Two-way matching compares the order with the invoice. Some workflows add an inspection or service-acceptance record as a fourth control. Whether that is required depends on the purchase and approved process; services can need acceptance evidence even when there is nothing to count at a dock.
A partial-receipt example
Assume an agreed order for 100 units at $12 each. The first delivery contains 80 accepted units, and the remaining 20 are still expected. The supplier invoices all 100 units for $1,200.
Order commitment = 100 × $12 = $1,200
Accepted first receipt = 80 × $12 = $960
Invoice quantity above receipt = 20 units
Amount requiring review = 20 × $12 = $240
Do not change the receipt to 100 merely to match the invoice. Confirm whether the agreement permits advance billing, whether a second delivery is missing from the record or whether the supplier should correct the invoice. A partial receipt can legitimately differ from the full PO quantity; match each invoice against the relevant receipt and remaining commitment.
If the supplier instead invoices 80 units at $12.50, the price difference is 80 × ($12.50 − $12) = $40. Review the accepted price history. Quantity and price discrepancies are separate; a unit-price formula alone does not calculate the full exposure when both differ.
Matching requires compatible units and scope
Convert cases, packs, weight and individual units before comparing quantities. Identify whether freight, discounts, taxes and other charges are included on the order, invoice or a separate document. Account for credits and prior invoices so the same delivery is not paid twice.
A receiving count verifies the incoming delivery; it does not verify all stock already in the warehouse. Cycle counts remain a separate control. Likewise, the shipping term is useful context for a damage dispute, but it does not by itself establish fault, insurance coverage or the final remedy.
Set tolerance and approval rules deliberately
Choose tolerances by item and risk rather than copying a universal percentage. An allowed measurement difference on a catch-weight item is different from accepting a missing sealed unit. Consider percentage and dollar limits, cumulative small discrepancies and who may authorize an exception.
A successful match can allow an invoice to proceed to approval under the policy. It does not automatically authorize payment, verify banking details or establish that goods passed a required quality inspection. Retain the reason, reviewer and supporting evidence for an override. Update an order only when there is a valid accepted change; never rewrite the original baseline simply to erase a discrepancy.
Why supplier follow-up helps
An outdated PO makes an otherwise ordinary invoice harder to reconcile. If the supplier confirmed a substituted pack or changed delivery date and the buyer accepted it, preserve that decision with the order. At receipt, record actual quantities and exceptions while the evidence is available.
This resolves some questions earlier. The invoice still needs review when it arrives: it may contain a duplicate line, an unagreed charge, an incorrect tax treatment or a different quantity from the accepted receipt.
LineNow's role
LineNow connects the order, supplier conversation and receiving so accounting can work from that history. Supplier replies can produce reviewable changes, and the receiver records delivered quantities and exceptions. Accounting handoff remains a separate step with its own approval and reconciliation responsibilities.
Demonstrate the 100-unit order and 80-unit receipt above, followed by an invoice for 100. Then test a price change, a supplier credit and a second partial delivery. If configurable match tolerances, automatic invoice approval or payment execution are required, verify each behavior explicitly; a connected purchasing record alone does not prove those AP controls.