Two-way match vs three-way match
Each, defined
Two-way match
Two-way match — Agreeing the vendor invoice to the purchase order, without a receipt — used for services and where nothing physical arrives.
Three-way match
Three-way match — Agreeing the purchase order, the goods receipt and the vendor invoice — quantity and price, line by line, within tolerance — before a bill is approved for payment.
Side by side
| Two-way match | Three-way match | |
|---|---|---|
| Documents | PO and invoice | PO, goods receipt and invoice |
| Suits | Services, subscriptions | Physical goods |
| Catches | Paying the wrong price | Paying for goods never received |
How they relate
Two-way matching suits services and subscriptions, where there is nothing to count on arrival. Three-way matching suits physical goods, where the receipt proves delivery.
Both are controls before payment. A mismatch holds the invoice until someone resolves the price or quantity difference.
Questions
- Is there a tolerance?
- Usually yes — a small percentage or amount, set by policy, below which a mismatch passes automatically.
- What is four-way matching?
- Four-way adds an inspection record for goods that must pass quality checks.
See it computed
Worked through: the calculators, the journal entries and the tools that use these terms.
- Journal entry for accounts payableWhen an approved vendor bill is entered, debit the expense or asset it bought and credit Accounts payable. When it is paid, debit Accounts payable and credit Cash.Entry
- Journal entry for an inventory purchaseWhen inventory is bought on credit under a perpetual system, debit Inventory and credit Accounts payable. If an early-payment discount is taken, debit Accounts payable for the full bill, credit Cash for what is paid and credit Inventory for the discount.Entry
Definitions are the glossary’s, generated from the same documents. Figures in the examples are computed by tested functions, not typed. General information for US companies under US GAAP, not accounting or tax advice.