Procurement Glossary
Three-Way Match: Triple document check in the purchasing process
November 19, 2025
Three-Way Match is a central control mechanism in purchasing that ensures that purchase orders, incoming goods and invoices match. This process minimizes errors and fraud by systematically matching all relevant documents before the invoice is released. Find out below exactly what Three-Way Match means, how the process works and what benefits it offers your company.
Key Facts
- Systematic comparison of order, delivery bill and invoice before payment release
- Reduces billing errors by up to 85% and prevents double payments
- Can be automated using modern ERP systems and e-procurement solutions
- Required by law for certain industries and company sizes
- Average processing time: 2-5 working days depending on complexity
Contents
What is Three-Way Match?
Three-Way Match is a structured control process for validating incoming invoices by comparing them with the corresponding purchase orders and goods receipt documents.
Core components of the Three-Way Match
The process is based on three main documents that are compared with each other:
- Purchase order with agreed conditions and quantities
- Goods receipt document with quantities and quality actually delivered
- Supplier invoice with invoiced items and prices
Three-Way Match vs. Two-Way Match
In contrast to Two-Way Match, which only compares the order and invoice, Three-Way Match also takes the physical receipt of goods into account. This ensures complete control over the quantity, quality and prices of the goods actually received.
Importance of three-way match in Procurement
The three-way match is essential for technical invoice verification and supports the dual control principle in invoice processing. It forms the basis for a transparent and traceable purchase-to-pay process.
Process steps and responsibilities
The systematic implementation of the three-way match requires clearly defined process steps and responsibilities between Procurement, Goods Receiving and Accounts Payable.
Automated matching process
Modern ERP systems perform the three-way match automatically by electronically comparing order numbers, article codes and quantities. If there is a match, the invoice is automatically forwarded for approval.
- Automatic tolerance check for quantity and price deviations
- Electronic forwarding after successful validation
- Exception handling for deviations above defined threshold values
Manual check for deviations
Deviations between the three documents require a manual check by qualified employees. The deviation workflow for quantities and prices defines the required escalation levels.
Documentation and archiving
All audit steps are systematically documented and archived in order to meet compliance requirements and ensure audit trails. This supports factual invoice verification and enables subsequent analyses.
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Important KPIs for Three-Way Match
Measuring three-way match performance requires specific metrics that evaluate the efficiency, accuracy and compliance of the process.
Throughput time and degree of automation
The average processing time from invoice receipt to approval is a key indicator of process efficiency. The degree of automation shows what proportion of invoices are processed without manual intervention.
- Average processing time: target value less than 3 working days
- Degree of automation: target rate of over 80%
- First-pass success rate for automatic synchronization
Error rate and deviation management
The number of invoices with deviations in relation to the total quantity shows the quality of the upstream processes. A low deviation rate indicates well-functioning order management processes.
Cost savings and ROI
The errors and duplicate payments prevented by Three-Way Match can be evaluated in monetary terms. These savings in relation to the implementation and operating costs result in the return on investment of the process.
Process risks and countermeasures in Three-Way Match
Despite its control effect, the three-way match involves specific risks that must be minimized by taking appropriate measures.
Delays due to complex deviations
Complex quantity or price deviations can lead to considerable delays in the payment process and jeopardize cash discount advantages. Clear escalation rules and defined tolerance ranges reduce these risks.
- Definition of tolerance thresholds for automatic releases
- Time-based escalation for longer processing times
- Prioritization according to supplier importance and invoice amount
System failures and data inconsistencies
Technical faults or data inconsistencies between different systems can interrupt the three-way match process. Redundant systems and regular data synchronization ensure continuity.
Compliance violations with incomplete documentation
Incomplete or incorrect documentation of the three-way match can lead to compliance violations. Automated workflow rules and systematic archiving minimize these risks and support audit requirements.
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Practical example
A medium-sized production company implements an automated three-way match for its 2,500 incoming invoices per month. The system automatically compares purchase orders from the ERP system with goods receipt documents and supplier invoices. In the case of an invoice for industrial components worth 15,000 euros, the system recognizes a quantity discrepancy: 100 units were ordered, but 105 units were delivered and invoiced. The automatic workflow forwards the invoice to Procurement for manual checking, which confirms the excess delivery as justified and releases the invoice.
- Automatic detection of 5% quantity deviation
- Forwarding to the responsible purchaser within 2 hours
- Manual inspection and approval within one working day
Current developments and effects
Digitalization and the use of artificial intelligence are revolutionizing the three-way match process and enabling new efficiency gains.
AI-supported document recognition
Artificial intelligence automates the extraction and interpretation of invoice data, even for unstructured documents. Machine learning algorithms recognize patterns and reduce manual intervention by up to 70%.
- Optical character recognition (OCR) for scanned documents
- Intelligent data extraction from various document formats
- Self-learning systems for improved accuracy
Integration in e-procurement platforms
Modern e-procurement systems integrate the three-way match seamlessly into the entire procurement process. ERP integration enables real-time matching and significantly shortens throughput times.
Mobile approval processes
The mobile release of three-way match results accelerates decision-making processes and increases flexibility for managers. Cloud-based solutions enable location-independent processing of critical deviations.
Conclusion
Three-Way Match is an indispensable control mechanism for modern purchasing organizations, ensuring transparency, compliance and cost efficiency. Automation through AI and ERP integration significantly reduces manual effort and speeds up payment processes. Companies that systematically implement Three-Way Match benefit from reduced invoice errors, improved supplier relationships and strengthened internal control. The continuous optimization of tolerance thresholds and workflow rules maximizes the benefits of this proven process.
FAQ
What happens if there are deviations in the three-way match?
If there are discrepancies between the order, goods receipt and invoice, automatic processing is stopped and the invoice is forwarded for manual checking. Depending on the type and amount of the discrepancy, an escalation is sent to the responsible purchaser or department manager for clarification.
How high should the tolerance thresholds be for a three-way match?
Typical tolerance thresholds are 2-5% for quantity deviations and 1-3% for price deviations. The exact values depend on the industry, supplier quality and the company's willingness to take risks. Tolerances that are too narrow lead to many manual checks, while tolerances that are too wide increase the risk of errors.
Which systems support the three-way match?
Modern ERP systems such as SAP, Oracle or Microsoft Dynamics offer integrated three-way match functions. Specialized e-procurement solutions and invoice automation tools extend these functionalities with AI-supported document recognition and extended workflow options.
Does Three-Way Match make sense for all invoice types?
Three-way match is primarily suitable for goods deliveries with physical goods receipt. A two-way match is often sufficient for service invoices or recurring payments such as rent, as there is no goods receipt document. The decision depends on the risk profile and the type of transaction.
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