2 Way Match Vs 3 Way Match: Maximizing Operational Performance With Accounts Payable Automation Software
2 Way Match Vs Way Match
Organizations are continually looking for new and innovative ways to optimize their processes and realize cost savings. Accounts Payable (AP) Automation software is one avenue through which organizations can dramatically reduce manual processing while safeguarding accuracy. However, in order to achieve the greatest benefit from AP automation technology, organizations need to understand the differences between 2-way and 3-way match and decide which option best fits their current needs and future objectives.
Two-way matching is process for reconciling invoices with purchase orders and/or receipts. The process requires manually entering data from both the purchase order and invoice into the accounts payable software before authorizing payment. Two-way matching ensures data quality and accuracy and is typically used in industries where goods are inventoried over time. Examples include retail, distribution and manufacturing, where each order needs to be matched against multiple shipments before deemed complete.
Three-way matching, on the other hand, is most commonly used to minimize costs associated with inventory shrinkage and theft, as it provides paper trail tieing vendor invoices to specific goods shipments. In addition, since invoices match only specific receipts and purchase orders, it eliminates the possibility of accidentally paying for goods not received, duplicate orders or erroneous invoices.
When it comes to selecting the right accounts payable automation software, there are few key considerations. First, organizations should consider what types of invoices they pay and determine the most efficient matching process. For example, if they are mostly paying the same supplier for goods and services over long period of time, two-way match process would probably be more efficient and less costly. If, on the other hand, organizations have frequent and unpredictable purchases from multiple vendors, three-way matching may be the best option.
Secondly, organizations must consider their internal controls and inventory management procedures. If an organization has strict inventory control policies, such as those governing retailers and manufacturers, the three-way match process would be the more logical choice. If, however, the organization does not have tight inventory controls, two-way match process would be sufficient.
Lastly, organizations need to decide how they want to configure their accounts payable automation software. For instance, how should invoice data be entered into the software? Is batch process more suitable, or will web-based solution offer greater accuracy and visibility? By understanding the best process for reconciling invoices with purchase orders and/or receipts, finance executives can better gauge the implementation costs and develop solution that fits within their budget.
Ultimately, by taking C-suite perspective and closely analyzing their operations, organizations can determine which accounts payable automation Softwaresolution is right for them. Whether two-way or three-way matching is employed, the ultimate goal is to reduce manual processing time and safeguard data accuracy. Doing so offers competitive edge and can provide substantial financial benefits.
