How Hedberg Three-Way Match Works
The process begins when a supplier invoice enters the accounts payable workflow. The team identifies the related purchase order and receiving record in Hedberg, then checks important details across all three documents. These include vendor information, item descriptions, quantities, unit prices, taxes, and invoice totals.
For example, a furniture dealer orders 20 office chairs at $150 each. The receiving team records delivery of all 20 chairs, and the supplier submits an invoice for $3,000 before applicable taxes. If the purchase order, receipt, and invoice agree, the invoice can move through the configured approval process.
This is the practical purpose of 3 Way Matching: compare the purchase commitment, actual receipt, and supplier charge before releasing payment. The process connects purchasing activity with receiving operations and accounts payable instead of treating each document as an isolated record.
Key Checks and Matching Rules
A reliable matching process checks both financial values and operational evidence. Quantity matching confirms that invoiced units do not exceed the quantity accepted in the receiving record. Price matching verifies that the invoice follows the authorized purchase order price. Vendor and document checks establish that the invoice belongs to the correct supplier and transaction.
- Vendor: Confirm that the invoice supplier corresponds to the vendor on the purchase order.
- Quantity: Compare ordered, received, and invoiced quantities.
- Price: Check unit prices, discounts, freight, and other authorized charges.
- Receipt: Confirm that the goods receipt documents the items being billed.
- Totals: Reconcile line amounts, taxes, and the final invoice value.
Businesses can define acceptable differences for rounding, freight, taxes, or partial deliveries. Matching Startegy Configuration helps establish whether a transaction requires three-way matching, two-way matching, or another approved rule based on vendor, expense type, or company policy. Consistent rules help the finance team apply the same controls across transactions.
Handling Exceptions and Approvals
A mismatch does not automatically mean that an invoice is incorrect. It indicates that the supporting records need review before payment. If a supplier invoices 20 chairs but the receiving record confirms only 18, accounts payable should verify whether the delivery was partial, the receipt was entered incorrectly, or the invoice quantity needs correction.
Similarly, if the purchase order lists a unit price of $150 but the invoice shows $160, the team should confirm whether an approved price change or additional charge explains the difference. The invoice can then follow the appropriate correction or approval path under company policy.
Clear exception routing assigns follow-up to the right person, such as purchasing for price differences or receiving for quantity discrepancies. Maintaining the reason for each exception creates an audit trail and helps finance teams understand why an invoice was held, corrected, or approved.
Supplier records also support dependable matching. Vendor On Boarding can connect onboarding documents, such as W-9 forms and contracts, with system records. Vendor Identity Verification provides another control by checking supplier identity against submitted documentation and relevant records. These checks complement invoice matching by helping establish that payments relate to the intended vendor.
Three-Way Match Compared With Other Methods
Three Way Match describes the broader control of comparing an invoice, purchase order, and receipt. The Hedberg workflow applies this principle to the records and approval rules configured for the business. In procurement, Three Way Match Procurement connects purchasing authorization and receipt confirmation with payment validation, helping teams maintain control from order placement through settlement.
By comparison, 2 Way Matching compares the invoice with the purchase order without requiring a receipt record as a third document. It may suit approved services or expenses where a conventional goods receipt is not applicable. The choice depends on the transaction type, internal policy, and available supporting evidence.
For a broader explanation of the available methods, Master AP Matching: 2-Way, 3-Way & No-Match Explained compares two-way, three-way, and no-match approaches and explains how each supports invoice controls. Businesses should select the method that fits the transaction rather than applying one rule to every invoice.
Procurement and Financial Reporting Benefits
Three-way matching links purchasing decisions with evidence of receipt and the amount payable. During procurement, purchase orders establish authorized commitments and improve visibility into expected spending. The purchase order then provides the reference for checking the supplier invoice against the agreed terms and recorded delivery. A well-defined 3-way match process helps teams connect requisitions, purchase approvals, receiving activity, and invoice settlement within the procure-to-pay workflow.
These controls can help reduce duplicate or unsupported payments, improve the accuracy of accounts payable balances, and provide clearer records for audits. They also support better vendor relationships because payment decisions are based on consistent evidence and exceptions can be explained with specific records.
An Exact Match occurs when the compared fields agree precisely. In practice, organizations may also allow configured tolerances for selected differences. Finance teams should monitor recurring exceptions, review tolerance settings periodically, and ensure that material price or quantity differences receive appropriate authorization.
Summary
Hedberg Three-Way Match compares supplier invoices, purchase orders, and goods receipt records before payment approval. By checking vendor details, quantities, prices, and totals, businesses can validate supplier charges and route discrepancies for review. Clearly configured matching rules, accurate receiving records, and documented approvals help accounts payable teams strengthen payment controls, maintain reliable financial records, and support consistent vendor management.