What is the Process Called When Matching Invoices to Checks and Mailing the Checks?
When organizations buy a product, they raise a purchase order that specifies the exact requirements for the product. A vendor then issues an invoice to clear the payment process. Matching these documents ensures that there are no errors in the process and helps in the quick settlement of vendor dues. In this process, the invoices and checks are verified to ensure that the correct details are included on the invoices. It also helps to avoid vendor fraud. When invoices and checks do not match, it is called a deviation.
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Three-way matching
When it comes to payment processing, there is a new standard in business called “three-way matching.” This process helps to create a solid paper trail of payments and ensures that payments are legitimate. It is a simple and effective method that can increase your cash flow and save you a ton of time. To learn more about the three-way matching process, watch this 15-minute webinar. It will show you how to implement it at your company.
During this process, the PO, invoice, and order receipt all have to agree. When a 3-way match is completed, the order can go forward to accounts payable for fulfillment. When the 3-way match fails, the transaction will be stalled until the problem is resolved. Traditionally, invoice verification processes have used only two-way matching. However, 3-way matching is now becoming more common, and it is the preferred method.
Two-way invoice matching
There are a few important details that can help ensure that your business processes its payments as accurately as possible. First of all, you should ensure that you are properly matching the invoice with the correct purchase order. This can be done in two ways: two-way matching involves matching the invoice to the purchase order; three-way matching involves matching the invoice to whichever document was used to create it. For example, if you purchased 10 semiconductors, and the invoice shows a cost of $6,000, you can be confident that you are paying the correct amount.
If you are mailing invoices to checks, you need to make sure the invoice is matched to the check. If the invoice isn’t matched, the process could fail, resulting in a hold of the check. This is known as a price deviation. Two-way invoice matching helps you avoid this issue by protecting your company against failed procedures and incorrect payments. In addition, 2-way invoice matching is fast and easy to implement.
Contract matching
Invoice matching is a process by which a company matches an invoice against an existing contract. This process is used to match invoices against recurring payments, such as monthly utility bills, building rent, maintenance charges, advertisement costs, and even legal or consulting services. The process eliminates the need for manually matching invoices to POs and helps a company clear repetitive payments early. Contact a Nanonets AI expert to learn more about how contract matching can help your business.
Invoice matching can also identify price deviations. Then, a vendor can be contacted to make the necessary corrections. Invoice matching is a critical step in the AP department. According to the Ardent Partners’ State of ePayables 2021 report, 45% of organizations view invoice exceptions as a key challenge. The average invoice exception rate is 22.5%. To prevent the AP department from losing money on invoices that are missing payment amounts, invoice matching is vital.
Manual match
Handling the matching process for check and invoice reconciliation manually is a time-consuming and error-prone process. Not only does this process take much longer than necessary, but it can also lead to mismatches and late payments. This process can result in more work for you and lower productivity. By automating your process, you can eliminate these problems and maximize your productivity. Fortunately, there are many benefits to automated check and invoice processing.
First, you need to decide which method to use. There are two main methods. You can either manually match each invoice or automatically match each receipt. Manual matching is the most time-consuming and inefficient approach. You should use batch auto-match or manual matching for these two processes. You can create a match strategy for your business and allocate it across suppliers. Once you have defined the match strategy, you can assign it to invoices.