2-Way, 3-Way, and 4-Way Matching Made Easy for Accounting Departments

Updated March 2025

Accounts payable teams have one mission: make sure suppliers get paid accurately and on time, without overpaying, duplicating payments, or introducing unnecessary risk. But in practice, that’s easier said than done. 

Between manual processes, miscommunications across departments, and a constant flow of invoices, it’s easy for errors to slip through. That’s where 2-way, 3-way, and 4-way matching come in. These simple yet powerful processes are among the most effective internal controls accounting teams can use to ensure accuracy and prevent financial leakage. 

And when you pair matching with automation? You get a streamlined, audit-ready AP process that actually works for you. 

Let’s walk through how each type of matching works and why making them easier with automation is a smart move. 

2-Way Matching: Your First Line of Defense 

Here’s a common scenario. Your team places an order for 500 ergonomic office chairs at $120 each. A few days later, an invoice lands in your inbox, but it lists 550 chairs at $135 each. 

Without checks in place, that overpayment could easily fly under the radar. But with 2-way matching, the invoice is automatically compared to the original purchase order. Any pricing or quantity discrepancies trigger a flag. 

Here’s what this simple check does, and why it matters: 

• Compares the purchase order with the invoice 
• Prevents overpayments by ensuring suppliers only bill for what was approved 
• Flags discrepancies before payment is issued 
• Commonly used for recurring services, office supplies, or low-risk purchases 
• Without it? You risk overpayments, pricing errors, and duplicate invoices 

3-Way Matching: Connecting the Dots Between Order and Delivery 

2-way matching works well for simple, recurring purchases. But it doesn’t always account for what was actually delivered. 

Let’s say you ordered 1,000 feet of steel tubing. The PO and invoice match, but your receiving team logs only 800 feet. Whether it was short-shipped or delayed, the mismatch could cause problems if AP isn’t looped in. 

3-way matching fills that gap by introducing the receiving report. It verifies not just what was ordered and billed, but what was physically received. 

Here’s how it connects ordering, billing, and delivery: 

• Compares the purchase order, invoice, and receiving report 
• Confirms goods or materials were actually delivered before payment 
• Ideal for inventory, raw materials, and goods-based purchases 
• Helps catch delivery mismatches, overbilling, and short shipments 
• Without it? You could end up paying for items that never arrived 

 Industry reports show that 39% of invoices contain errors. Many of those errors stem from delivery discrepancies that 3-way matching helps prevent. 

4-Way Matching: When Quality Can’t Be Compromised 

Now imagine the shipment arrives in full, but when it’s inspected, 20% of the materials don’t meet your quality standards. 

If you’re only relying on the PO and receiving slip, AP might approve the full payment without knowing that part of the shipment was rejected. 

That’s why some teams take it a step further with 4-way matching. It includes a final step: verification that what was received was also accepted by your quality or compliance team. 

Here’s how it helps ensure you're paying for quality:  

• Compares the purchase order, invoice, receiving report, and inspection or acceptance records 
• Confirms goods meet quality, safety, or compliance standards before payment 
• Often used in manufacturing, healthcare, and construction 
• Helps avoid paying for defective, damaged, or non-compliant items 
• Without it? You risk additional costs, compliance issues, and production delays 

Why Manual Matching Slows Everything Down 

Even when these controls exist, manual matching is a bottleneck. Teams chase paper trails, approvals stall in inboxes, and disconnected systems make it hard to verify anything in real time. 

According to Ardent Partners, only 32.4% of invoices are processed straight-through without human intervention. More than 20% are flagged as exceptions. 

The average invoice takes 14.6 days to process. That timeline hurts cash flow and slows the month-end close. 

Automating Matching with Smart Capture 

That’s where Smart Capture comes in. It combines AI-powered document capture with Human-in-the-Loop validation. Invoices, POs, and receiving slips are automatically matched based on your rules. 

You no longer need to dig through files or cross-check spreadsheets. Instead, the system captures and matches line-item data in real time, flagging exceptions and routing them to the right person with full context. 

Here’s what automated matching looks like in action: 

• Documents are captured and indexed automatically 
• Matching rules are applied the moment data enters the system 
• Exceptions are routed with full context, so there’s no chasing 
• Stakeholders are notified automatically for faster approvals 
• Audit trails are logged for every action and document 

Teams that implement Smart Capture with 3-way matching and exception routing often see significant time savings, reducing invoice intake time by as much as 70%. 

Matching as a Built-In Fraud Deterrent 

Matching doesn’t just keep your process efficient. It helps protect against payment fraud too. 

In 2024, 79% of organizations reported payment fraud attempts, and nearly 60% of companies experienced losses over $5 million. 

Here’s how matching strengthens your fraud defenses: 

• Prevents payment on unauthorized or altered invoices 
• Stops duplicate or inflated invoices from being approved 
• Enforces internal purchasing protocols 
• Flags suspicious activity before money goes out the door 

The stronger your match, the lower your risk. 

What Teams Gain When Matching Is Built In 

When matching becomes part of your AP workflow, not an afterthought, it unlocks meaningful benefits. 

Here’s what teams unlock when matching is built into the process: 

• Faster invoice processing and approval cycles 
• Fewer errors, disputes, and late fees 
• Better use of early payment discounts 

• Stronger supplier relationships 
• Easier audits with a clear, searchable history 
• More time for strategic work, not document chasing 

Matching Is Just One Part of the Equation 

Strong matching controls help you automate approvals with accuracy and confidence. But automation doesn’t stop there. 

How you pay matters just as much as what you pay. Traditional methods like paper checks can slow you down, introduce unnecessary costs, and increase your risk, even if your invoice process is airtight. 

Explore how modern AP teams are rethinking payments to complete the automation picture: 
Traditional vs. Virtual Payments: Why Modern AP Teams Are Making the Switch