# What is 2-Way Matching in Accounts Payable?

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[Amy Deiko](/content/author/amy-deiko/index.html)

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## What’s Invoice Matching?

Invoice matching is the action of checking if the information on the invoice matches the details written on the [purchase order](/content/purchasing-terms/what-is-a-purchase-order/index.html).

## What’s 2-Way Matching?

Two-way matching is a process used in [accounts payable](/content/blog/define-accounts-payable/index.html) to ensure that you’re only paying for what you actually ordered and received. This compares the purchase order (PO) and the supplier's invoice.

## 2-Way vs 3-Way Matching

- **Two-way**: Compares the purchase order and the invoice. Simpler and faster, but doesn’t account for discrepancies in received goods.
- **Three-way**: Involves matching the purchase order, the invoice, and the receiving report. Provides a deeper review but can be more time-consuming.

## How 2-Way Matching Works?

1. **Invoice received**: The process starts when your company receives an invoice detailing the items purchased, quantities, and prices.
2. **PO comparison**: The AP team compares the invoice against the original purchase order, checking item descriptions, unit prices, and quantities.
3. **Approval**: If everything matches, the invoice is approved for payment. Discrepancies require further investigation before payment.

## Reasons to Choose 2-Way Matching

- **Prevents overpayments**: Ensures confidence in the invoice information.
- **Reduces errors**: Helps identify mistakes before payment, especially in manual processes.
- **Better approval process**: Speeds up validation of invoices.
- **Fraud protection**: Provides an extra layer of defense against accounts payable fraud.

## Should you Automate the Process?

**Yes.** Automation enhances speed and efficiency, reduces human errors, and simplifies compliance audits.

## How to Choose between 2-Way and 3-Way Matching?

2-way matching is ideal for recurring purchases, while 3-way matching is best for large purchases requiring complete document alignment.

## Best Practices for 2-Way Matching

- **Standardize documents**: Ensure consistent formats for purchase orders and invoices.
- **Communicate with suppliers**: Set clear expectations for invoices to minimize discrepancies.
- **Regularly review processes**: Adjust as your business evolves.
- **Use technology**: Improve efficiency and accuracy through automation.
- **Track metrics**: Monitor number of matched invoices, discrepancies, and processing times to improve AP processes.

## Invoice Matching Terms

- **Purchase Order (PO)**: Document outlining products, quantities, and prices needed from the supplier.
- **Invoice**: Payment request detailing item descriptions, quantities, prices, and payment terms.
- **Goods Received Note (GRN)**: Confirms arrival of ordered goods, used for checking against orders.
- **Invoice hold**: Occurs when discrepancies exist between documents; payment is delayed for resolution.
- **Tolerance**: Acceptable range of discrepancies for faster approval.
- **Touchless processing**: Automated system for handling invoices to approval with minimal intervention.
- **Price deviation**: When invoice prices differ from PO prices, causing a hold.
- **Quantity deviation**: Mismatch in number of items listed, often triggering an invoice hold for investigation.

## Key Takeaways

- Two-way matching helps prevent overpayments and errors, improving financial accuracy and speeding up approvals.
- Automating this process offers significant benefits in terms of efficiency and error reduction.
- Choose the appropriate matching method based on purchase type and potential discrepancies.

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**Author**: Amy Deiko - A procurement writer and MBA student passionate about innovative business processes.