Accounts payable pays suppliers, and the three-way match is the control that keeps payments correct. Before paying an invoice, three documents must agree: the purchase order, the goods receipt, and the invoice itself. When all three match on item, quantity, and price, payment is safe. When they disagree, payment waits until someone resolves the difference.
What each document proves
- The purchase order proves the purchase was authorised, at an agreed price, before the goods arrived.
- The goods receipt proves the items actually arrived, in the quantity claimed.
- The invoice proves the supplier is asking for a specific amount, which must match the other two.
Small differences within an agreed tolerance may pass automatically, but tolerance is a policy, not a habit. Know your company's tolerance before approving anything that does not match exactly.