3-way matching sounds simple on paper, but it’s one of those AP controls that can either save you from costly mistakes—or slow your entire process down. In this guide, you’ll learn how 3-way matching actually works, when it’s worth using, and how modern automation helps teams keep control without creating bottlenecks.
Why 3-way matching gets a bad reputation in accounts payable
3-way matching has a bit of a reputation in accounts payable. Everyone knows what it’s meant to do. Fewer people enjoy doing it. And a surprising number of teams quietly avoid it altogether — not because they don’t care about control, but because it’s historically been slow, manual, and frustrating.
The irony is that 3-way matching was never designed to create friction. It was designed to create confidence. And today, with automation and AI doing the heavy lifting, it’s finally starting to live up to that promise.
So, what actually is 3-way matching?
At its simplest, 3-way matching is a sense check before money leaves the business.
Before an invoice is paid, three things are compared: what was ordered, what was received, and what’s being billed. If those three line up, the invoice moves forward. If they don’t, it pauses — not to be awkward, but to avoid paying for something that shouldn’t be paid yet.
In practice, that means bringing together:
- The purchase order, which shows what was approved
- The goods receipt or service confirmation, which shows what arrived
- The supplier invoice, which shows what’s being charged
It’s a basic idea, but a powerful one. You’re not relying on memory, email chains, or goodwill. You’re relying on evidence.
Why finance teams still rely on it
As organisations grow, invoices arrive faster, suppliers multiply, and the margin for error shrinks. One incorrect payment might not hurt much. A pattern of them will.
3-way matching reduces the risk of overpayments, duplicate invoices, and uncomfortable conversations with suppliers weeks later. It also gives finance teams something just as important: a clear, defensible audit trail.
When someone asks why an invoice was paid, the answer isn’t “because it looked right”.
It’s “because the order, receipt, and invoice all matched”.
That difference matters — especially under audit pressure or internal review.
Where things start to feel painful
The problem has never been the principle. It’s been the execution.
In the real world, purchases don’t behave perfectly. Goods arrive in parts. Prices change slightly. Freight appears where no one expected it. Services are completed without a neat “receipt” to point to.
When 3-way matching is done manually, every one of those situations becomes a mini investigation. Someone has to chase information, cross-check documents, and decide whether a difference matters or not.
Common friction points tend to look like this:
- Partial deliveries that don’t match the original PO
- Small price variances that block approvals
- Missing or delayed receipts
- Invoices parked while someone “checks one thing”
Multiply that by dozens — or hundreds — of invoices, and the process quickly becomes a bottleneck. That’s when teams start cutting corners.
The quiet shift away from manual matching
For years, finance teams faced an uncomfortable trade-off. Either keep strong controls and accept slower processing, or move faster and accept more risk.
Manual matching simply didn’t scale. As volumes increased, the time spent checking invoices increased with them. Eventually, teams would reserve 3-way matching for only the most critical purchases — or abandon it altogether.
The control didn’t fail.
The tooling did.
How automation changed the equation
Automation was the first real turning point.
Instead of finance teams hunting for documents, systems began linking invoices to purchase orders automatically. Receipt data could be pulled in without manual checks. Invoices that matched cleanly moved through without human involvement, while genuine exceptions were surfaced clearly.
3-way matching stopped being something you did to every invoice and became something you paid attention to only when it mattered. That alone saved hours every week.
From volume to focus
Instead of reviewing everything, finance teams could focus on the invoices that genuinely needed attention — with the right context already in place.
Where AI takes it further
AI is what’s made 3-way matching genuinely practical again.
Rather than treating every variance as a problem, AI can recognise patterns. It learns which suppliers regularly invoice freight separately, which price differences are normal, and which exceptions deserve attention.
That means:
- Low-risk invoices pass through quietly
- Routine variances stop clogging approval queues
- High-risk exceptions are flagged with context, not confusion
Finance teams move from checking line by line to making informed decisions. Time is spent where judgement adds value — not where rules already tell the story.
A better way to think about 3-way matching
The most effective finance teams today don’t think of 3-way matching as a rigid rule. They see it as a risk lens.
High-value, high-risk purchases deserve more scrutiny. Low-risk, routine spend doesn’t need to be slowed down. The process adapts to the situation instead of forcing everything through the same funnel.
That flexibility is what makes modern matching work — and what makes it sustainable.
The takeaway
3-way matching was never meant to be painful. It just outgrew the tools that supported it.
With automation and AI handling the repetitive work, finance teams no longer have to choose between control and speed. They can protect the business, pay suppliers accurately, and keep things moving — all at the same time.
And once that balance is in place, 3-way matching stops feeling like a chore and starts feeling like what it always should have been: quiet confidence before money goes out the door.
Martin is the founder of Zahara and stays hands-on with its product and creative direction. He’s a driving force behind the company’s momentum, with a focus on speed and clarity in both work and life.
TL;DR
3-way matching is one of the simplest ways to reduce invoice errors and protect your business — without slowing AP down.
- 3-way matching compares the purchase order, goods receipt (or service confirmation), and supplier invoice
- If they match, the invoice can be approved and paid with confidence
- If they don’t, it flags an exception so you only investigate what actually matters
- It helps prevent overpayments, duplicate invoices, and supplier disputes
- Manual 3-way matching doesn’t scale — automation makes it fast, consistent, and easier to audit
- AI takes it further by spotting patterns (like “normal” freight variances) and highlighting the risks worth attention
- Best practice is to apply it based on spend and risk, not as a one-size-fits-all rule
In short: 3-way matching is control without the chaos — especially when automation and AI do the heavy lifting.
FAQs
Quick answers to the questions we hear most often — so you can find what you need fast, avoid the jargon, and move on with confidence.
Yes. AP automation software can automatically match invoices to POs and receipts, route exceptions to the right approver, and maintain a full audit trail. This reduces manual invoice checking and helps finance teams process invoices faster.
2-way matching compares the PO and invoice only, while 3-way matching also checks the goods receipt (or service confirmation). Australian finance teams typically use 3-way matching when receipts are required and control is more important than speed.
AI helps by recognising patterns in supplier billing, predicting which exceptions are genuine risks, and reducing time spent on low-value checks. It can also improve accuracy when reading invoices and coding line items, making matching faster than manual AP workflows.
For partial deliveries, the invoice should be matched to the portion of goods actually received. Many Australian AP teams use tolerance rules or partial receipt matching so invoices can be processed without manual back-and-forth, while still maintaining control.
3-way matching is best for higher-risk spend such as inventory, equipment, large supplier invoices, and repeat purchases where delivery confirmation matters. It’s especially useful for businesses with multiple approvers, high invoice volume, or strict audit requirements.
3-way matching creates a clear audit trail showing that an invoice was validated against the PO and receipt before payment. This strengthens internal controls, supports financial compliance, and reduces the risk of duplicate or incorrect supplier payments.
