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Intelligent Document Processing for Automated 3-Way and 2-Way Matching
In accounts payable, ensuring accuracy and transparency in the payment processes is crucial. Accounts payable (AP) departments in organisations are responsible for processing invoices and ensuring that payments are made to business partners accurately and in a timely manner. One of the most important tasks in accounts payable is matching invoices to purchase orders (PO) and receiving reports to verify that all goods or services have been received and are correct. This process is known as matching and is typically done in either a 3-way match or a 2-way match. Intelligent Document Processing can automate and optimise this process.
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What Is a 2-Way Match in Accounts Payable?
The basic terms of an order are documented in the purchase order. The purchase order shows important information such as quantity, price, description and payment terms. On the invoice, the payment information for the goods or services outlined in the purchase order is shown. A two-way match involves comparing the data on the purchase order to the invoice data.
What Is a 3-Way Match in Accounts Payable?
For a 3-way match in accounts payable, there are three key documents – the purchase order, the invoice, and the receiving report. The purchase order details the goods or services ordered, the invoice represents the amount to be paid, and the receiving report confirms that the goods or services were indeed received. A 3-way match involves comparing the invoice to the purchase order and the receiving report. This ensures that all three documents match and that the goods or services have been received before payment is made.
Pros and Cons of 2-Way Matching
While a 2-way matching is faster, it leaves room for errors because the packing slips and receiving reports are not included in the process.
Pros and Cons of 3-Way Matching
In most instances, 3-way matching is preferred to ensure the company does not pay invalid invoices. The primary reason for 3-way matching is to prevent inaccurate or fraudulent invoice payments by resolving mismatches before processing payments. The 3-way match saves companies from overspending, paying for something not received, and helps to detect potential fraud.
At the same time, providing this extra layer of verification means comparing another set of documents. If the matching is done manually, it takes even more time to validate an invoice.
In general, both ways of matching have their merits depending on the company, its size and systems, and its business relationships.
Accounts Payable Automation: Simplifying 3-Way and 2-Way Matching
Manual tasks in accounts payable, such as data entry, manual matching and verification, are time-consuming and prone to errors. This is why accounts payable automation is becoming increasingly important among enterprises looking to streamline their AP processes and increase efficiency. Automation can simplify and optimise 3-way and 2-way matching by automatically matching invoices to purchase orders and receiving reports, flagging any discrepancies for review by the accounts payable team.
Intelligent Document Processing: Automation of 3-Way and 2-Way Matching
Intelligent Document Processing (IDP) solutions for procurement, specifically for AP departments, leverage advanced technologies like artificial intelligence (AI), natural language processing and Machine Learning (ML) to automate invoice processing.
IDP mimics human abilities for identifying, contextualising, processing and matching documents like invoices and purchase orders. It uses AI, ML and human-in-the-loop automation to convert unstructured data into structured and actionable data. Relying on orchestration, IDP can automate 2-way and 3-way matching in accounts payable.
The Role of Orchestration in Automating the Matching and Processing of Documents
The Netfira Platform leverages IDP capabilities and orchestration to automate the matching and processing of documents. By orchestrating the entire document processing process from connecting business partners, extracting and processing data to exporting it to downstream systems, the Netfira Platform streamlines all steps of the P2P process.
When it comes to invoice processing, the Netfira Platform extracts data from invoices, processes it according to customisable workflows and rules, and matches it with corresponding details in another set of documents like purchase orders or receiving reports before structured data is ready for export to an ERP system or any other connected system and the original document is archived automatically.
By coordinating and connecting the various tasks, workflows and systems involved in matching and processing documents, organisations can ensure smooth and efficient operations, reduce manual work, and avoid costly errors with the Netfira Platform.
Beyond Invoice Matching: Document Processing and Matching with the Netfira Platform
The Netfira Platform enables the automated processing of all kinds of transactional documents – be it structured documents like invoices or unstructured documents like purchase order confirmations. Offering customisable workflows for the processing of various document types which can be tailored to business’ individual needs allows efficient and accurate document management along the P2P process. Designed to flexibly adapt to business’ processing rules and requirements, the Netfira Platform transcends the automatic 2-way or 3-way matching of invoices. Its flexible and customisable functionalities can be leveraged to match any kind of document with another set of documents such as a purchase order confirmation with a purchase order and an advanced shipping notice.
Intelligent 2-Way and 3-Way Matching and AP Automation through IDP
In summary, 3-way and 2-way matching in accounts payable are essential tasks that ensure accurate and timely payments to suppliers. While manual matching is time-consuming and error-prone, automation solutions using the IDP approach like the Netfira Platform can simplify and optimise the matching process. Orchestrating the various tasks involved in matching and processing invoices, businesses can streamline their accounts payable processes and improve efficiency.
