2-Way Invoice Matching

 🔹 What is Two-Way Invoice Matching?

It is a verification process where the Accounts Payable team matches two key documents:

1️⃣ Purchase Order (PO)
2️⃣ Vendor Invoice

If both documents match in quantity, rate, taxes, and total amount, the invoice is cleared for payment.

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🔹 What Exactly Gets Matched?

During matching, AP verifies:

✔ Item Description – same product/service as ordered
✔ Quantity – invoice quantity should not exceed PO quantity
✔ Price/Rate – must match the approved PO rate
✔ Taxes & Charges – GST, freight, discounts, etc. as per PO
✔ Payment Terms – credit period, due date
✔ Vendor Details – vendor name & PO number must match

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🔹 Workflow of Two-Way Invoice Matching

Step 1: Vendor shares invoice
Step 2: AP team retrieves the corresponding PO
Step 3: System/analyst compares invoice values with PO
Step 4:
• If matched → invoice approved → payment scheduled
• If mismatch → discrepancy raised → vendor or procurement team resolves

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🔹 Benefits of Two-Way Matching

✔ Prevents overbilling by vendors
✔ Eliminates duplicate invoices
✔ Ensures contractual pricing compliance
✔ Improves accuracy of vendor payments
✔ Strengthens internal financial and audit controls
✔ Reduces manual errors in AP
✔ Speeds up the invoice approval cycle

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🔹 When Should Companies Use Two-Way Matching?

Best suited for organizations that have:
• A standard procurement process
• Low to medium risk purchases
• Clear PO-based ordering
• Need for faster AP processing compared to 3-way matching

Industries using it widely: IT services, consulting, agencies, trading, retail, manufacturing (low-risk items).

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🔹 Example

PO: 100 units @ $50 each = $5,000
Invoice: 100 units @ $50 each = $5,000
→ Matches perfectly → Invoice approved.

If invoice shows 110 units or $55 rate → Mismatch → Put on hold.

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🔹 Two-Way vs Three-Way Matching
• Two-Way: PO ↔ Invoice
• Three-Way: PO ↔ GRN ↔ Invoice (more strict)
Two-way is faster; three-way is more robust for goods receiving.

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💡 Two-Way Matching helps companies maintain accuracy, transparency, and strong financial governance while keeping AP operations efficient.