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2 way vs. 3 way vs. 4 way match for PO Payments

In procure to pay cycle, you can mention different kind of match process as a precondition to payment to vendor. If the match is not successful, then the invoice will be on hold. The match issue will have to resolve before Invoice hold is removed, and Invoice can be paid.

In 2 way match, Purchase Order Price and quantity is checked against Invoice price and quantity. It is usually done for items or services for which receiving is not done. Organizations can also choose to do this for low value items.

In 3 way match, Good/Service Received quantity is also checked against invoiced quantity along with a 2 way match. It is usually done for items for which receiving is done or services for which confirmation is required. This is the most common method of PO payment.

In 4 way match, Accepted quantity (quality check) is also checked against invoiced quantity along with a 3 way match. It is usually done for goods or services for which quality assurance is required.

Tolerances can also be set for quantity and price to avoid non payments due to minor differences. As long as the difference is within tolerance, hold will not be placed on invoice. Invoice will be successfully paid without any issue in such cases.

What to do if Invoice is on hold?

You will have to see what is the reason behind the hold. For example, In 3 way match it is possible that the price per unit in Invoice and Confirmation does not match. There are 2 possibilities here.

  1. Confirmation is correct, but Invoice is wrong. Check the Invoice in this case.

    • Is it a manual entry error (Supplier sent correct invoice but entry was wrong). In this case cancel the invoice, and enter correct invoice.

    • If Supplier sent wrong invoice, then contact the supplier and get correct invoice. You can then cancel the first invoice and enter correct invoice.

  2. If Confirmation was entered wrong, then contact the person who received the goods or service. Ask them to cancel the confirmation/GR and enter the correct cancel.

Once you resolve the mismatch, Invoice will be processed successfully.


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