How 3-Way Matching Works

PayInvoice Next compares three documents — the Purchase Order (PO), the Goods Receipt Note (GRN), and the Invoice — to verify that what was ordered, what was received, and what is being billed all agree. This page explains the matching process, score calculation, tolerance handling, and the decisions the system makes.

The Three Documents

Document	Represents	Key Fields Used
Purchase Order (PO)	What was agreed with the supplier	Item, Quantity, Rate, Amount
Goods Receipt Note (GRN)	What was physically received	Item, Received Qty, Accepted Qty, Rejected Qty
Invoice	What the supplier is billing	Item, Quantity, Rate, Amount, Tax

The matching engine loads all three documents and compares them line by line and in aggregate.

The Matching Process

Matching proceeds in five steps:

Step 1 — Line Matching. The engine maps each invoice line to the corresponding PO line. It uses item code as the primary match key, falling back to item name, HSN/SAC code, or description when codes don't match exactly.

Step 2 — Quantity Comparison. For each matched line, the engine compares three quantities: what was ordered (PO Qty), what was received (GRN Accepted Qty), and what is invoiced (Invoice Qty). The key rule is: you should not be billed for more than what was received.

Step 3 — Price Comparison. The engine compares the agreed rate on the PO against the rate on the invoice. Price increases beyond the configured tolerance are flagged. Favorable variances (invoice rate lower than PO rate) are noted but generally accepted.

Step 4 — Value Comparison. The engine compares total values — both at the line level (Qty × Rate) and at the document level (including taxes). This catches rounding differences, tax discrepancies, and aggregate mismatches that line-level checks might miss.

Step 5 — Score Calculation. Each component (quantity, price, value, line matching, document references, duplicate check) receives a weighted score. These combine into an overall Match Score percentage.

Match Score

The overall match score is a weighted percentage from 0% to 100%:

Match Score = (Quantity Score × Weight)
            + (Price Score × Weight)
            + (Value Score × Weight)
            + (Line Match Score × Weight)
            + (Document Reference Score × Weight)
            + (Duplicate Check Score × Weight)

The weights are configured by your organization. A typical profile gives the heaviest weight to quantity and price, with smaller weights for value, line matching, and reference checks.

Score Grades

Grade	Score Range	Meaning
Excellent	95–100%	Perfect or near-perfect match across all components
Good	85–94%	Minor variances, all within tolerance
Fair	70–84%	Notable variances that may require review
Poor	Below 70%	Significant mismatches requiring manual intervention

Tolerances

Not every variance is a problem. PayInvoice Next uses configurable tolerances to distinguish acceptable variances from genuine mismatches.

For example, if the tolerance for quantity variance is set to 2%:

• PO: 100 units, Invoice: 99 units → within tolerance (1% variance, accepted)
• PO: 100 units, Invoice: 95 units → exceeds tolerance (5% variance, flagged)

Tolerances can be configured as percentage-based, absolute value-based, or a combination of both. Your organization's administrators set these thresholds in IPU Settings.

Match Decisions

Based on the match score and the specific variances found, the engine makes one of four decisions:

Decision	When It Applies	What Happens
Auto-Approve	All components match or fall within tolerance. Score meets the auto-approval threshold.	The invoice proceeds directly to Purchase Invoice creation with no manual review needed.
Approve with Variance	Minor variances exist (e.g., favorable price difference) but are within acceptable limits.	The invoice is approved but the variances are recorded for audit purposes.
Hold for Review	Significant variances detected (e.g., quantity over-billing, price increase beyond tolerance).	The invoice is routed to a reviewer for manual assessment. The reviewer can approve, adjust, or reject.
Reject	Critical mismatches such as billing for items not ordered, billing without receipt, or amounts that far exceed expectations.	The invoice is rejected and flagged. The supplier may need to resubmit a corrected invoice.

Two-Way and Non-PO Matching

Not all invoices have all three documents:

• Two-Way Match (PO + Invoice, no GRN): When goods receipt is not applicable (e.g., services), the engine performs a two-way match comparing the PO against the invoice only.
• Non-PO Invoice: When no Purchase Order exists, the invoice is flagged for manual PO assignment or processed as a non-PO invoice following your organization's approval rules.

What the User Sees

After matching completes, the IPU record shows:

• The Match Score percentage
• The Match Decision (Auto-Approve, Hold for Review, etc.)
• A link to the Match Result record with full line-by-line comparison details

If the decision is "Hold for Review," the invoice appears in the reviewer's queue on the IPU Dashboard. The reviewer can drill into the Match Result to see exactly which lines have variances and what the amounts are.

Related Pages

• Handle Match Failures — What to do when variances are detected
• Matching Field Reference — Every field on the Match Result form
• Matching FAQ & Troubleshooting — Common matching questions
• 3-Way Matching Overview — Summary of the matching module