It doesn’t matter whether you’re a global conglomerate, a nationwide business, or a start-up company — invoice matching can feel clear as mud if you aren’t using the best technology. To put the power in your hands, we demystified how invoice matching to minimize risk can be easy and efficient. You don’t have to double-check for differing amounts across multiple streams of incoming invoices. No more juggling missing records and tax codes, leading to awkward phone calls with suppliers and late payments. Invoice matching is all about speeding up the process and doing things right.
Table of contents:
- What is invoice matching?
- Different types of invoice matching
- How does invoice matching work?
- Manual vs. automated invoice matching
- Why automated invoice matching is important for your business
- Important invoice matching terms to know
- How Coupa can help with your invoice matching needs
What is invoice matching?
Invoice matching is one of the most crucial aspects of any AP team — and it can be one of the most tedious if done incorrectly. Before we tell you how to make this process remarkably easy, let’s clarify what it is:
Invoice matching is the process of comparing invoices with supporting documents to verify that information is correct prior to payment. As you can imagine, using technology to ensure documents match and are error-free leads to faster settlement of vendor dues and prevents risks of accidental errors and fraudulent activity. We call that a win-win.
Different types of invoice matching
No matter how you slice it, invoice matching matters. What also matters is where you slice it. There are a few main types to consider based on the details of your business.
Two-way matching
Two-way invoice matching simply compares two documents: the purchase order and the invoice. Think of it like a double-check, making this process suitable for smaller businesses where goods are delivered and consumed, like service contracts or digital purchases.
Three-way matching
Three-way invoice matching is more of a triple check, verifying that the invoice matches both the purchase order and the goods receipt. This style is used by most businesses.
Four-way matching
Four-way invoice matching cross-checks invoices, purchase orders, goods received notes, and inspection reports prior to payment. This is important in some industries where payment depends on quality, and less in others like physical goods.
How does invoice matching work?
Let’s answer the one, big question that every accounts payable team shares: How can mass invoicing be error-free and easy? Automation is key. With automation, you can set up the level of invoice matching that works best for your business. The relevant person assigned will only be notified for issues and exceptions to be able to resolve issues immediately. Here’s a peek into how the process works:
- Receipt and capture: Automation enables you to capture invoices through various channels, including electronic data interchange (EDI), email, or direct upload.
- Data extraction and validation: Upon receipt, optical character recognition (OCR) technology extracts and validates relevant data from invoices.
- Invoice matching: The system automatically reconciles invoices with purchase orders and receipts that meet your predefined criteria. Invoices that pass the test are routed for approval to the relevant person, ensuring proper authorization before payment.
Manual vs. automated invoice matching
When you’re dealing with matching hundreds of invoices a day, having the proper technology to automate the process has advantages like accuracy, ease, and transparency. What’s more, when discrepancies are detected, your team will be flagged and provided with tools for resolving them efficiently to expedite resolutions and avoid late payment fees with suppliers.
Why automated invoice matching is important for your business
At Coupa, invoice automation is something we know like the back of our hands. Our industry-leading solution is easy to implement and offers a range of impactful benefits, giving you:
Accuracy assurance
With Coupa’s Spend Guard feature, you’ll have confidence that invoices accurately reflect the terms outlined in purchase orders and delivery receipts, reducing risk of overpayments and errors.
Financial control
You’ll maintain tighter control and compliance over financial transactions, nourishing transparency and identifying discrepancies and exceptions early on to avoid late payment penalties.
Streamlined operations
Working automatically, you’ll accelerate invoice processing cycles, enabling faster approval and payment of invoices while being completely accurate.
Enhanced supplier relationships
By eliminating errors and double payments, effective invoice matching fosters stronger supplier relationships built on trust, collaboration, and ease.
Data insights for better decisions
You’ll be empowered to make informed decisions and be better prepared for company audits because you’ll have access to valuable insights like spending patterns, vendor performance, and procurement efficiency.
Important invoice matching terms to know
Understanding key invoice matching terms is essential for effectively managing financial processes. Here are some key terms to understand:
- Deviation: A deviation occurs when there is a difference in the amount a company anticipates paying for goods or services and what a vendor invoices
- Touchless invoice processing: An automated and seamless processing of invoices from receipt to payment — including data extraction and invoice matching — without any need for manual intervention, extracted and mapped against a PO (purchase order) or order receipt without any manual attention
- Tolerance: A preset amount of variance you may allow between an invoice amount and the PO amount without the invoice being flagged or put on hold
- Hold: an invoice that has been set to be temporarily delayed or suspended for a certain amount of time
How Coupa can help with your invoice matching needs
It’s no surprise that, compared to manual processes, automated systems can transform your business processes. Wouldn’t it be powerful if you could not only minimize the manual work required of your employees, but also reduce the natural human errors that come with it? It’s the low-hanging fruit to free up your accounting department’s time to focus on tasks that truly matter and significantly minimize the pain points that come from invoice matching.
Meet the best Invoice Management System for the modern enterprise.
Procurement
You’ll achieve greater spend control and AP efficiency with pre-approved spend and an easy-to-adopt supplier experience.
Protection
You’ll halt fraudulent or duplicate invoicing spend in its tracks with Coupa’s real-time, AI-based fraud detection system, Spend Guard.
Payments
You’ll automate and optimize invoice payments and enable your business to spend and pay smarter.