This article also explains the purchase order process using MYOB Advanced and Ocerra as an example but can be applied to other integrations.
A three-way match is the process of comparing the purchase order, supplier invoice and purchase receipt to make sure they match before approving the invoice for payment. If it matches, the invoice will be approved for payment, and if not, the decision should be made to whether pay this invoice in full or partially.
A two-way match is the process of comparing the purchase order and supplier invoice to see if there are any issues even before the goods arrive. A two-way match can be a standalone process where the goods receipt is not applicable.
Three or two-way matching is important to eliminate discrepancies in the purchasing process. It brings transparency and makes auditing simple as you have all the necessary documents required for audits.
Comparing all three documents is essential for a business to secure and fool-proof the payment process.
Unfortunately, the manual three-way match is a time-consuming and error-prone process. It also hinders the long-term benefits of the three-way matching as it is slow and offers little visibility to take action promptly where required.
How does AP automation help a three-way match process?
AP automation benefits are focused on eliminating paper processes, repetitive and time-consuming tasks as well as approval bottlenecks.
With a thee-way match it is essential to have an AP automation solution. It brings all the documents together, saving the company time, capturing discrepancies in the early stages to avoid the risk of overpayments, and automating approval to protect payments.
By capturing discrepancies in the early stages, the company has the time to avoid overpayment by dismissing it in a timely manner, negotiating with suppliers or property recording it where necessary.
It is much harder to capture discrepancies with the manual process, especially when invoice volumes are high. Often, invoices get entered for payment at the last minute, skipping the proper approval process. There is no time to negotiate better deals with suppliers and ask questions as the next month approaches.
On top of it, incorrectly entered data or duplication can also lead to fraudulent supplier invoices and overpaid transactions.
Let’s review automation benefits in more detail.
Bringing all the documents together
Invoice automation captures all the supplier bills into one central place, and with API integration, it brings the purchase order lines and receipt info from your system together in one place. No need to look at different screens or systems.
Ocerra would also assist in matching invoice lines and purchase order lines automatically by looking at quantities, amounts and item codes. Alternatively, it allows quickly adding the matching purchase order lines to the invoice for comparison.
Automatically flagging document discrepancies
Price and quantity discrepancies are brought to your immediate attention. Even before the goods are received, the invoice is already matched to the purchase order. In both ways, it helps to identify whether there is an overpayment or other supply chain or payment issues.
Ocerra specifies the three most common types of mismatches:
When quantities on the invoices line do not match the quantities on the Purchase Oder lines
When the invoice price does not match the purchase order price; and
When the receipted quantities do not match with the invoice quantities
Why do discrepancies happen?
Prices go up, or the price is not billed according to the terms.
Unexpected shipping costs may have been added.
Invoice data may have been entered incorrectly from the supplier’s side.
Goods are not delivered according to the catalogue, and different pricing has been applied.
Goods delivered but not the right quantity or amount that was requested.
Ocerra helps you to resolve these inconsistencies faster.
Smart approvals to protect your payments
Reviewing and approving supplier invoices and supporting documents is a necessary process. Without automation, it is incredibly time-consuming. There are numerous follow-up, lost or duplicated invoices mixed with no visibility on who is holding an invoice and why; all lead to inefficiencies across the entire business.
Automation eliminates approval bottlenecks and late payments. As well as the risk of something being missed or an opportunity for an individual to manipulate any data.
Ocerra brings visibility to the entire process as well as an audit trail if any questions arise.
Ocerra allows to auto-approve invoice if all the documents match. And set up smart workflows to route invoices to the right people in all other scenarios. The AP team can review any issues before sending documents for approval and check where the invoice is at any time in the workflow.
Think of Ocerra as an extension that enhances your MYOB three-way and two-way matching process.
An overview of the standard Purchase Order process when working with both system
Step 1 (MYOB): The Purchase Oder is created in MYOB and sent for approval.
Ocerra syncs the Purchase Oder once it is created. It syncs all the Purchase Order information that is getting updated in MYOB every 20-minutes.
Step 2 (MYOB): The Purchase Order is Receipted in MYOB when goods are received (if applicable). A non-stock or service item is optional to receipt in MYOB.
Ocerra syncs Receipted information to your Purchase Order lines, such as quantities and unit cost.
Step 3 (Ocerra): The supplier invoice is matched with the purchase order and shows the Receipted information, if applicable, from your MYOB all in one place.
If everything matches, an invoice can be auto-approved and sent for export. A final check can be added before posting the AP bill to MYOB. Ocerra will create a new bill with the original file attached and links to Purchase Order and Receipt where applicable in MYOB.
If there are discrepancies in quantities and dollar amounts, an invoice needs to be reviewed and approved before sending it to MYOB for payment.
Want to have more automation and visibility?
In Ocerra, you can add a real-time dashboard showing buckets with invoice lists based on the specified requirement. Each list in the bucket gets automatically filtered for you.
For example, you can have a bucket where all invoices are matched and ready for export. Or a bucket where there are discrepancies between invoice and purchase order.
Such a dashboard is a great addition for high volumes of invoices processed each month and will help the team to prioritise the documents accordingly.
AP automation like Ocerra helps you manage your invoices more effectively, eliminate time-consuming approval processes and bring visibility to their entire accounts payable process.
To learn more, get in touch with us today, or book a demo call here.