What’s two-way matching?


Accounting in any firm entails coping with invoices each month.

One of the crucial difficult duties whereas coping with them is the verification of those invoices.

All invoices obtained by an organization for services or products which have been bought from a vendor should be checked for accuracy earlier than fee is initiated.

For this, all particulars of the acquisition as talked about within the bill are matched with the corresponding buy order to make sure that the product/providers that have been ordered have been delivered accurately and on the worth agreed upon. This verification course of is known as 2-way matching.

Let’s rapidly perceive how this works.

Recap of the Procurement Course of

Earlier than understanding 2-way matching, let’s rapidly recap how procurement works in a enterprise setting.

Buy order (PO) is a legally binding settlement issued by the purchaser to the seller, informing of the kind of product/service ordered and the amount and costs agreed upon.

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Bill is a legally binding doc that’s issued by the seller to the purchaser together with or after the supply of the product/service to the shopper. It has all particulars of the seller, buyer, product/service being delivered, pricing and fee mode.

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Giant firms may have Items Receipts and Vouchers, that point out the completeness of the approval course of – it serves as guide conserving for supporting paperwork like PO, bill, receipt and so on. and incorporates info on approvals, case numbers and different info associated to that specific buy.

For example the IT division of an organization ABC, requires 10 swivel government chairs for its IT executives.

  • The IT division could (relying on firm coverage) challenge a purchase order requisition throughout the suitable managerial hierarchy.
  • A purchase order request is distributed to the Buy (or equal) division within the firm to search out acceptable distributors of the product/service.
  • As soon as a vendor is recognized, the mandatory groundwork is completed to establish the product and worth. For instance XYZ, a provider of workplace furnishings can present swivel government chairs at a worth of $250 per chair, to be delivered in 5 days.
  • As soon as provider XYZ is finalized, the buy order is generated by the acquisition division of ABC, citing the product and the worth agreed upon.
  • One copy of the PO is distributed to XYZ, one is retained by the Buy division of ABC, one to the Accounts Payable Division.
  • When XYZ provides the chairs, the bill is offered together with or after the supply to ABC.

Now that the bill have been obtained, the matching course of is carried out by the accounts payable crew at ABC.

What’s 2-way matching?

Two manner matching, also called buy order matching, is a course of to confirm that the main points on the buy orders and the related invoices match in order that the bill may be paid.

The match is normally made for the amount billed and the bill worth. The next circumstances should be met :

  • The bill amount is lower than or equal to the quantity ordered within the PO.
  • The bill worth is lower than or equal to the worth quoted within the PO.

A profitable match can discuss with a 100% precise match, or outlined utilizing an identical tolerance (eg. >=95% match required) based mostly on the enterprise setting.

Solely as soon as the match is profitable upon verification by the AP crew, the fee is initiated.

In case of unsuccessful match, the bill processing and fee is paused. An accounts payable supervisor manually checks the bill and both approves the bill fee or rejects the bill.

That is 2-way matching.

Let’s summarize the 2-way matching course of in a flowchart for simple comprehension.

graph TB
A[Need of a Purchase] –> C[Send purchase request to Purchase Department]
C –> D[Purchase Department finds appropriate vendor]
D –> E[Finalize vendor XYZ]
E –> F[Purchase Department generates the Purchase Order]
F –> G[Send one copy of PO to XYZ, retain one in Purchase Department, send one to Accounts Payable Department]
G –> H[Vendor XYZ supplies the chairs and provides invoice]
H –> I[Matching process by Accounts Payable Team]
I –> J{Verify circumstances:
1. Bill amount ≤ PO amount
2. Bill worth ≤ PO worth}
J –> |Match ≥ 95%| Ok[Successful match, initiate payment]
J –> |Match < 95%| L[Unsuccessful match, pause invoice processing and payment]
L –> M[Accounts Payable Manager manually checks the invoice]
M –> |Approves| Ok
M –> |Rejects| N[Reject the invoice]

Within the above instance, suppose ABC was not adhering to 2-way matching.

After low cost discussions, they challenge a purchase order order for 10 chairs at a reduced complete worth of $2000 ($200/chair as a substitute of $250/chair) as agreed with XYZ.

After reviewing and accepting the acquisition order, and delivering the ten chairs, XYZ sends an bill for the unique worth of $2500 ($250/chair). The bill creator at XYZ could not have been conscious of the low cost supplied by the XYZ advertising and marketing individual to the acquisition division at ABC for the majority buy. Or it could possibly be a deliberate unhealthy enterprise observe.

If the bill particulars usually are not in contrast and matched with the PO particulars, the AP (Accounts Payable) crew at ABC could pay the additional $500 that was initially waived.

A two-way match course of may help catch this error earlier than a fee is made. The method ensures that solely invoices for the right amount and amount are paid.

Significance of 2-way matching

Two-way matching is essential for sustaining accuracy and monetary management in accounts payable.

  • Accuracy Assurance: Two-way matching ensures that invoices are correct by verifying them towards corresponding buy orders, stopping overpayment or fee for undelivered items/providers.
  • Monetary Management: It enhances monetary management and reduces the chance of errors or fraud within the accounts payable course of.
  • Vendor Relationship: Efficient implementation fosters transparency and belief in vendor relationships, as discrepancies are promptly addressed and resolved.
  • Compliance: It ensures compliance with inside procurement insurance policies and exterior rules, minimizing monetary dangers and audit points.
  • Value Financial savings: By avoiding overpayments and resolving discrepancies effectively, firms can save important prices in the long term.

How guide 2-way matching works

Guide 2-way matching is often favored solely by companies with very low transaction volumes or these with particular necessities necessitating human oversight.

Right here is how the method seems to be like.

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Let’s take the instance of XYZ Inc., and discover how they implement guide 2-way matching. XYZ Inc. makes use of Quickbooks for accounting. That is how their procurement course of seems to be like with 2-way matching.

1. Technology of Buy Order (PO):

  • Quickbooks gives a PO creation and administration module.
  • XYZ Inc. creates / receives a PO for the seller straight in Quickbooks, detailing ordered objects, portions, costs, and supply dates.

2. Receipt of Vendor Bill:

  • Upon receiving the cargo, XYZ Inc. will get an bill from the seller, additionally logged into Quickbooks.
  • The info entry crew manually populates the merchandise particulars, portions, costs, taxes, and reductions towards every bill.

3. Guide Matching Course of:

  • The accounts payable crew manually matches bill particulars with the corresponding PO in Quickbooks, making certain portions and costs align.

4. Verification and Approval:

  • Verified invoices are authorized for fee inside Quickbooks, whereas discrepancies are flagged for evaluation.
  • Reviewers manually course of the invoices which fail 2-way matching.

5. Fee Initiation:

  • Utilizing Quickbooks, XYZ Inc. initiates fee for authorized invoices, following their fee procedures.

Although meticulous, this course of establishes a basis for monetary integrity.

Challenges in 2-way matching

Whereas guide 2-way matching ensures a hands-on strategy to verifying invoices towards buy orders, it poses a number of challenges:

Information mismatch challenges: The accounts payable crew should align buy orders with invoices by manually checking them which ends up in missed particulars and sluggish operations, risking productiveness and enterprise relationships.

Lengthy Processing Instances: Accounts payable typically contends with knowledge inaccuracies in as much as 20% of invoices, dedicating about 25% of their time to resolving such points, which delays processes and will increase operational dangers.

Fraud and theft dangers: The Affiliation of Licensed Fraud Examiners (ACFE) finds that organizations sometimes lose 5% of income yearly to fraud, with criminals typically duping accounts payable by way of convincing fraudulent invoices, posing a major danger to vigilance and monetary integrity.

Managing a number of bill codecs: Giant organizations deal with buy orders and invoices from numerous sources in numerous codecs akin to phrase paperwork, spreadsheets, XML paperwork for EDI, PDFs, pictures, and paper paperwork. Guide consolidation is vulnerable to errors, resulting in points like overpayment, incorrect funds, and bill duplication, finally inflicting productiveness and belief losses.

Value implications of guide processing: Conventional bill and buy order matching entails important prices attributable to labor, supplies, and postage, with further monetary impacts from penalties, late charges, and misplaced enterprise attributable to processing errors. Guide bill processing prices are identified to succeed in as excessive as $15-50/bill.

Easy methods to automate 2-way matching?

Automated 2-way matching is like having a useful robotic to your accounting duties.

Immediately, AP Automation instruments can mechanically test if the main points on invoices match what’s in your buy orders, saving you time and decreasing errors.

These instruments can work with different accounting techniques; many techniques have prepared to make use of integration choices, or API / middleware to supply seamless knowledge switch between the totally different techniques.

With these integrations, companies can combine automated 2-way matching into their AP workflows seamlessly, whereas nonetheless utilizing the accounting software program that they’re comfy with.

Nanonets’ AP automation software program, for instance, may be built-in with different accounting techniques, akin to QuickBooks and Sage. Here’s a simplified depiction of the automated 2-way matching workflow.

image 44

How does it work?

Let’s check out how an AP Automation software program like Nanonets automates the two-way matching course of utterly.

1. Automated Bill Assortment

Nanonets simplifies this course of by mechanically importing invoices and POs from emails, drives, accounting software program and databases as quickly as they arrive, making certain that each piece of information finds its place in a centralized, digital repository.

Nanonets can mechanically retrieve emailed invoices and POs straight out of your inbox, extracting related info seamlessly from each electronic mail our bodies and attachments.

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All handwritten and printed invoices may be simply scanned utilizing a smartphone or straight uploaded into the platform.

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Invoices and POs can be imported into Nanonets out of your mail, apps and databases.

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2. Automated Information Entry

Say goodbye to hours of guide knowledge entry. With Nanonets AI, invoices are learn with over 99% accuracy, drastically decreasing the time spent on tedious duties.

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This implies your crew can deal with extra significant work whereas Nanonets takes care of information extraction and enter straight into your accounting software program / ERP, with none guide intervention.

3. Clever 2-way matching

Leveraging AI, Nanonets mechanically performs two-way, three-way, or four-way matching by studying and cross-referencing the extracted bill knowledge with buy orders, receiving experiences, and inspection experiences imported from numerous sources.

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4. Approval Routing

The system flags any discrepancies for human evaluation, however in any other case, invoices that match firm standards are mechanically routed for approval or straight authorized based mostly on pre-set guidelines.

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5. Approvals

Approvals with Nanonets are not a bottleneck. They turn out to be versatile and dwell the place your group does—whether or not that is on electronic mail, Slack, or Groups. This eliminates the necessity for disruptive telephone calls and the all-too-familiar barrage of reminders.

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6. ERP Integrations

Prepared-to-use integrations be sure that invoices and POs get recorded in your accounting software program / ERP mechanically as quickly as they happen.

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Authorised invoices are mechanically queued for fee in your accounting software program.

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7. Actual-Time Analytics

Nanonets goes past mere transaction processing by providing superior analytics capabilities and real-time knowledge reporting.

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This helps you get real-time insights into your accounts payable course of, enabling you to observe spending patterns, establish cost-saving alternatives, and improve monetary forecasting.

purchase order
invoice 2

PO → Bill

Match buy orders to invoices 

Deciding on the precise software program for 2-way matching

Choosing the proper software program for automating 2-way matching will depend on your online business dimension and sort.

Some choices work as standalone options or as half of a bigger accounting system, relying on what you already use. For instance, integrating with present techniques, like ERP, is important for some instruments.

  • Nanonets makes dealing with invoices and buy orders simple by automating the matching course of. It auto-imports invoices and POs, makes use of AI for correct knowledge entry and matching, flags mismatches for simple and seamless guide evaluations, and updates knowledge in your accounting software program / ERP in actual time.
  • Oracle’s Payables software mechanically matches invoices to POs, checks compliance with set tolerance ranges, and updates portions and quantities billed based mostly on the bill particulars.
  • Sage Intacct streamlines buying with set workflows for transactions and approvals. MineralTree automates matching invoices to POs or receipts for Sage Intacct, capturing particulars from invoices mechanically and inserting them into approval and fee processes. It retains every thing according to the corporate’s ERP.
  • Nexonia Bills gives versatile, cloud-based expense administration with deep integration into your techniques.
  • Tipalti simplifies bill processing with OCR and knowledge extraction, setting guidelines for matching invoices to POs and making ready them for fee.
  • DocuWare makes use of AI to extract key bill knowledge, test for legitimate distributors and duplicates, and match invoices to POs and supply notes, making certain correct quantities.

Many 2-way matching instruments can be found, every with options designed for various wants.

Why you must automate 2-way matching

Automating the 2-way matching course of gives a number of benefits.

Paperless Dealing with

When paperwork like invoices and buy orders are all digital, paperless dealing with cuts out the necessity for paper and reduces the quantity of guide work wanted. This implies issues work quicker, can develop simply, and are extra versatile. Paperwork get despatched, become digital type, sorted, checked, authorized, and processed with out anybody needing to maneuver paper round. This is the way it works:

  1. The system seems to be for brand spanking new emails.
  2. It takes attachments from the emails to work on them.
  3. The system reads the attachments to get the data wanted.
  4. It checks the main points in invoices or buy orders towards set guidelines.
  5. An bill is put collectively, matched with buy orders and receipts in response to guidelines, ensuring there are not any repeats.
  6. It lets customers know if invoices have been dealt with proper.

AI helps the system get higher over time, studying from its customers and their distinctive wants.

Fast Matching

Matching buy orders may be finished tremendous rapidly by the system, a job that may be actually onerous for folks to do alone.

Dealing with A number of Paperwork at Scale

When there are numerous buy orders and invoices, automation makes it a lot simpler and quicker to kind by way of all of them.

All the time Prepared for Audits

The system retains monitor of every thing, ensuring every thing is right and fast. With paperwork already authorized and arranged, audit processes are smoother.

Much less Work, Extra Productiveness

The AI makes use of advanced algorithms to know knowledge just like the human mind, however quicker. It learns and will get higher, that means much less guide checking is required.

With much less routine work, the finance crew can deal with extra essential duties like planning and evaluation, which may help the corporate’s earnings.

Much less Errors

AI techniques can catch errors early on, stopping larger issues later. If one thing’s mistaken, it rapidly lets the IT crew know to repair it.

Saves Cash

Although there’s an preliminary price, working these AI techniques may be less expensive than paying a full wage.

Safe and In a position to Develop

The system can work on a regular basis, not like folks, making operations extra environment friendly and safe.

A survey by Levvel Analysis exhibits that faster approval of invoices and elevated worker productiveness are the highest two advantages skilled from a swap to AI-enabled 2-way and 3-manner matching processes, together with quite a few different tangible advantages reported by companies automating bill processing and 2-way matching.

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It’s crucial to notice that automating bill processing and buy order matching advantages a number of features in your online business:

  • Finance executives can decrease bills and reallocate assets to enhance the underside line and help strategic and company enlargement.
  • Company executives achieve insights into efficiency and money movement administration by way of dashboard analytics offered by quite a few automation instruments.
  • Accounts Payable Groups can take away the necessity for paper invoices and guide processes by leveraging automated routing, coding, and matching of provider invoices in response to established accounting ideas.
  • Accountants and Analysis Employees achieve speedy and complete entry to buy orders and invoices, aiding in future planning actions.
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Advantages of bill processing and 2-way matching automation


The idea of 2-way matching is a crucial course of within the realm of accounting inside any enterprise, primarily centered on making certain the accuracy and integrity of transactions between an organization and its distributors.

It entails a meticulous verification process the place the main points on buy orders (POs) are matched towards these on the corresponding invoices to verify that the services or products ordered have been delivered accurately and on the agreed-upon costs.

This course of not solely safeguards towards overpayments or paying for undelivered items but in addition reinforces monetary management, fosters belief in vendor relationships, and adheres to compliance requirements.

Whereas guide 2-way matching gives precision by way of human oversight, it’s fraught with challenges akin to knowledge mismatches, time inefficiency, fraud dangers, and the excessive price of guide processing.

With the arrival of automation, 2-way matching turns into a slick, error-proof course of. Platforms like Nanonets automate 2-way matching and combine seamlessly with accounting techniques. This automation streamlines bill processing, enhances knowledge accuracy, and permits real-time analytics, finally contributing to extra strong monetary administration and operational effectivity.

purchase order
invoice 2

PO → Bill

Match buy orders to invoices 

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