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What is the three-way match?

Author:
Harold Averkamp, CPA, MBA

Definition of Three-Way Match

In the accounting and bookkeeping area of accounts payable, the three-way match refers to a procedure used when processing an invoice received from a vendor or supplier. The purpose of the three-way match is to avoid paying an incorrect and perhaps fraudulent invoice.

Example of Three-Way Match

The “three-way” part of the three-way match refers to the three documents that will be compared:

  • The vendor’s invoice that was received and will become part of an organization’s accounts payable when it is approved
  • The purchase order that was prepared by the organization
  • The receiving report that was prepared by the organization

The “match” part of the three-way match refers to comparing the quantities, price per unit, terms, and other information appearing on the three documents. In other words, does the vendor’s invoice detail agree with the organization’s purchase order, and to the goods actually received as shown on the organization’s receiving report? Only if the details on the three documents are in agreement will the vendor’s invoice be entered as an account payable.

The three-way match is an important step in safeguarding an organization’s assets.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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