What are the three documents in three-way matching?
The purchase order, goods receipt and supplier bill.
Lynka guide
Three documents answer three different questions.
Three-way matching checks the purchase order, goods receipt and supplier bill together before the business decides whether the payable makes sense.
The purchase order says what you intended to buy. The goods receipt says what physically arrived. The supplier bill says what the supplier wants you to pay. When those three agree, payment review is easier. When they do not, the mismatch tells you where to investigate.
Three-way matching is useful because no single document can prove the whole purchasing story.
01
Purchase order: what did we authorize?
The PO records supplier, products or services, quantities, unit costs, currency, expected date and commercial terms. It is the baseline for the order placed with the supplier.
A supplier bill matching itself is meaningless; the PO provides the original commercial expectation.
02
Goods receipt: what arrived?
Receiving records the delivered quantities and can distinguish accepted, damaged and on-hold goods. Partial deliveries are normal, so received quantity may be lower than ordered quantity for a period of time.
For stocked products, accepted receipts can update inventory while damaged or held goods should not quietly become available stock.
03
Supplier bill: what are we being charged?
The supplier bill records the payable amount, due date, currency and billed products or services. It belongs to accounts payable and should remain traceable to the purchase evidence when possible.
A supplier invoice can arrive before all goods, after all goods or in several installments, which is why matching needs context.
04
Compare quantity, price and commercial references
The match asks whether billed quantities and amounts are consistent with the order and receipt. A perfect match is straightforward; a mismatch should produce a review question rather than an automatic assumption of error or fraud.
Freight, tax, substitutions, partial billing and legitimate price changes can all explain differences, depending on the company’s purchasing policy.
05
Treat exceptions as work to resolve
A quantity mismatch may mean goods are missing, a receipt has not been posted or the supplier billed ahead. A price mismatch may reflect an agreed change or an invoice error.
Record the resolution so the same discrepancy is not rediscovered by another person when payment becomes due.
06
Decide how matching affects approval
Some businesses require a successful match before payment; others allow authorized exceptions. The control should reflect risk, purchasing volume and staff responsibilities rather than copying an enterprise policy blindly.
Approval and matching are related but different. A bill can be reviewed by the right person while still carrying a documented exception.
07
Understand partial receipts and bills
One PO can receive goods in stages and supplier bills can also be partial. Matching should therefore compare the relevant quantities and relationships rather than assuming one PO always equals one receipt and one bill.
This is one reason a structured purchase trail is more reliable than a single “paid?” column in a spreadsheet.
08
Use received-not-billed views during period close
Goods may have been received before the supplier invoice arrives. Finance should be able to identify that condition instead of assuming no liability exists because the bill is missing.
A received-not-billed view helps accounting review outstanding purchase events before closing a period.
Three-way match review
- Purchase order exists and belongs to the supplier.
- Received quantities are posted and exceptions are recorded.
- Supplier bill references the correct purchase context.
- Billed quantities are compared with ordered and received quantities.
- Price and currency differences are understood.
- Tax and freight treatment is checked where relevant.
- Exceptions have an owner and explanation.
- Approval policy is satisfied before payment.