Make your job easier by getting your clients to adopt a three-way matching system for their purchases. Whether you’re reviewing their books or are hired to conduct a financial audit, this system can save you and your client billable hours. The three-way match is an accounting control that ensures the payments a company makes are accurate and complete. The process involves matching up three documents and verifying them before payments get made to vendors.
- The purchase order
- The invoice
- The shipping receipt, packing slip, or bill of lading
Each of these documents should have reference numbers, and item descriptions, quantities and prices to make it possible to match one with the other two documents. This system helps accomplish the following:
- Saves the company money by detecting fraudulent invoices and preventing the company from paying for damaged or duplicate items, or invoices with prices that differ from those on purchase orders
- Improves relations between buyers and sellers since accurate documents make everyone’s lives easier
- Prepares the company’s records for an audit. The easier the company makes it for you to audit, the more smoothly an audit is likely to go.
Since this process is labour-intensive, most companies have adopted some electronic or automated form of the three-match system, using databases and scanners, so that scanning a barcode on a packing slip can prompt accounts payable to cut a cheque. Emerging technologies such as blockchain also make the three-match system more efficient by performing the verification, payment, and auditing process in one step.