Invoice matching is one of the most important controls in the procure to pay cycle. It protects companies from overbilling, incorrect deliveries, and unnecessary spend. Yet many teams still struggle to decide whether they should rely on two way matching, three way matching, or a mix of both.
This guide breaks it down in simple terms. It explains how each method works, what makes them different, and which one is better for your organisation.
Invoice matching is the process of verifying a supplier invoice against other procurement documents before it is approved for payment. The goal is simple: pay only for what was ordered and received, at the right price and quantity.
It is one of the most important controls in the procure to pay cycle and helps finance teams avoid overpayments, errors, and supplier disputes.
Invoice matching protects cash and removes errors early in the process. It helps organisations:
Without invoice matching, finance teams spend more time chasing documents, resolving errors, and correcting mistakes after payment.
Invoice matching typically follows three models:
Invoice matching can be done manually or through an automated system, but the flow stays the same. Here is the step by step process:
Three-way matching is a standard control step in procurement. It checks three documents against each other before a supplier gets paid.
The system compares quantities, prices, and line items. If everything aligns, the invoice gets approved. If not, it gets flagged.
It prevents overbilling, duplicate payments, and incorrect deliveries. It also keeps procurement, finance, and suppliers on the same page without extra back and forth.
Three way matching is best for purchases where physical receipt matters and the risk of delivery issues or incorrect billing is higher. It is typically used for:
Inventory and stock items
Raw materials
Machinery and equipment
Office and warehouse supplies that require receiving
High value goods
Items delivered in multiple or partial shipments
Categories where shortages, damages, or quality issues are common
These purchases need a formal goods receipt because the organisation must confirm that the right items arrived in the right quantity before approving the supplier’s invoice.
Two way matching is a basic invoice verification method used in the procure to pay process. It compares two documents before approving a supplier invoice:
If the quantity, price, and line items match, the invoice is cleared for payment. If there is a mismatch, the system flags it for review.
While efficient, two way matching has clear limitations:
It cannot confirm whether goods were actually received
It offers limited protection against short deliveries
It is weaker for high value or physical inventory
It cannot detect duplicate invoices tied to delivery discrepancies
This is why high value or critical spend categories usually require three way matching.
Two way matching is most effective for low risk purchases where goods are not physically received or where delivery issues are minimal. Common examples include:
Software subscriptions
Marketing or professional services
Utility bills
Office supplies
Recurring monthly expenses
These categories do not require a formal goods receipt, so adding extra checks would only slow the process down.
Four way matching is a stronger control step in procurement. It checks four documents against each other before a supplier gets paid.
The purchase order
The goods receipt or delivery note
The inspection or quality approval
The supplier invoice
The system verifies quantities, prices, delivered items, and quality standards. If all four align, the invoice gets approved. If anything is off, it is flagged for review.
Four way matching prevents overbilling, poor quality deliveries, and compliance issues. It gives procurement and finance complete visibility and reduces the risk of paying for items that are damaged, non compliant, or not up to specification.
Four way matching is used for purchases that require an additional quality or inspection check before payment can be approved. It adds an inspection or quality verification document to the standard three way match. It is typically used for:
Manufacturing materials that need quality inspection
Raw materials with strict specifications
Safety critical items
Pharmaceutical or medical supplies
Engineering components or spare parts
High value equipment with performance or compliance checks
Any category where quality, safety, or regulatory standards must be confirmed
These purchases require a formal inspection step because the organisation must verify not only what was delivered, but also whether it meets required standards before paying the supplier.
| Feature | Two Way Matching | Three Way Matching | Four Way Matching |
|---|---|---|---|
| Documents checked | PO and Invoice | PO, Goods Receipt, Invoice | PO, Goods Receipt, Inspection, Invoice |
| Control strength | Basic | Strong | Very strong |
| Confirms delivery | No | Yes | Yes |
| Confirms quality | No | No | Yes |
| Best for | Low risk or service based purchases | Physical goods, high value items | Regulated, quality sensitive, or safety critical items |
| Examples | Subscriptions, utilities, professional services | Inventory, equipment, raw materials | Pharmaceuticals, engineering parts, manufacturing materials |
| Speed of processing | Fastest | Moderate | Slowest (extra step) |
| Risk of errors | Higher | Lower | Lowest |
| Prevents overbilling | Yes | Yes | Yes |
| Prevents short deliveries | Limited | Strong | Strong |
| Prevents quality issues | No | No | Yes |
Automating invoice matching removes the slow, repetitive, and error prone parts of the procure to pay process. Instead of people checking documents line by line, the system does it instantly and only highlights the exceptions. This improves accuracy, speeds up payments, and reduces the workload on procurement and finance teams.
Key reasons to automate invoice matching:
Automating invoice matching is one of the simplest ways to strengthen financial control and speed up the entire P2P cycle without adding complexity.
Invoice matching sits at the core of a healthy procure to pay process. Whether an organisation uses two way, three way, or four way matching, the goal stays the same: pay only for what was ordered, delivered, and approved. Matching protects cash, prevents costly mistakes, and keeps procurement and finance aligned.
As companies grow, manual matching becomes harder to maintain. Documents get lost, errors slip through, and approval cycles slow down. Automating invoice matching removes that friction. Systems match documents instantly, flag exceptions early, and create a clear audit trail with far less effort. The result is cleaner data, faster payments, and stronger control without piling work onto teams.
A well designed matching process does more than reduce overbilling. It builds trust with suppliers, improves compliance, and gives the entire organisation confidence that spend is accurate and controlled. In a space where small errors can turn into big problems, invoice matching is one of the simplest and most reliable safeguards you can put in place.