Guide · Finance
Three-way matching, explained.
Check every supplier invoice against the purchase order and what actually arrived — before you pay.
Purchase orderPO-1188
| Item | Qty | Unit price |
|---|---|---|
| 27-inch monitor | 30 | 178.50 |
| Docking station | 30 | 96.00 |
| HDMI cable | 60 | 4.20 |
Goods receivedGRN-0942
| Item | Qty | Unit price |
|---|---|---|
| 27-inch monitor | 30 | — |
| Docking station | 24 | — |
| HDMI cable | 60 | — |
Supplier invoiceINV-20417
| Item | Qty | Unit price |
|---|---|---|
| 27-inch monitor | 30 | 184.00 |
| Docking station | 30 | 96.00 |
| HDMI cable | 60 | 4.20 |
- 27-inch monitor billed at S$184.00 — the PO says S$178.50
- Docking station 30 billed, 24 received
- HDMI cable matches on all three
One line clears. Two are held for an approver: S$165.00 overbilled on monitors, and six docking stations billed but not received.
In short
Three-way matching checks each supplier invoice against two other documents before it is paid: the purchase order (what you agreed to buy, at what price) and the goods received note or delivery order (what actually arrived). If item, quantity and price agree on all three, the invoice is cleared for payment; if not, it is held for someone to resolve. It catches overbilling, short deliveries, duplicate invoices and the wrong GST rate.
01The idea
What is three-way matching?
Three-way matching is an accounts-payable control: before you pay a supplier, compare the invoice line by line with the purchase order and the goods received note. Pay only for what was ordered, at the agreed price, and actually delivered.
- Purchase orderWhat you agreed to buy, how many, at what price.
- Goods received noteWhat actually arrived, counted at the door — often the signed delivery order.
- Supplier invoiceWhat the supplier asks you to pay.
- Match, then payAll three agree: cleared. Any difference: held for a person.
Two-way matching (invoice against PO only) is quicker but can't tell you whether the goods arrived. Four-way matching adds an inspection or quality check.
02What it catches
The mismatches it catches
Most differences are small and honest. They still add up — and a few aren't honest at all.
A unit price higher than agreed — small per unit, large across a year.
More on the invoice than on the goods received note: a short or late delivery.
The same invoice sent twice, or sent again with a new number.
GST at the wrong rate — Singapore's standard rate is 9% from 1 January 2024 — or GST charged by a supplier that isn't GST-registered.
Lines on the invoice that aren't on any purchase order.
Payment terms, discounts or delivery charges that differ from the contract.
03Exceptions
What to do when they don't match
A match that nobody acts on is just a report. Decide the exception process before you start.
- 1Set tolerancesDecide which differences are small enough to pass — rounding, for example — and write them down.
- 2Hold, don't payAnything outside tolerance waits. Nothing is paid on a mismatch.
- 3Ask the right personPrice issues to purchasing, quantity issues to the warehouse — each with the evidence.
- 4Fix it at the sourceAsk the supplier for a credit note or a corrected invoice, or record the short delivery.
- 5Approve with a recordWhoever clears an exception approves the exact adjustment, and it's logged.
04With AI
How an AI agent does the checking
Matching is reading and comparing — exactly what AI agents are good at. An agent reads invoices, POs and goods received notes in whatever form they arrive (PDFs, Excel, scans, phone photos), lines them up, and lists only the exceptions, with the evidence.
- Mei Ling · Accounts
Match this month's supplier invoices against the POs and goods received notes.
20 invoices · PO register · GRNs - Collie
Done. 17 invoices match. 3 are held — the biggest: Northwind billed 30 monitors at S$184.00; the PO says S$178.50.
Adjustment journal — waiting for approval
- Invoice
- INV-20417 · Northwind Supplies
- Overbilled
- 30 × S$5.50 = S$165.00
- GST (9%)
- S$14.85
- To recover
- S$179.85
Also held: 6 docking stations billed but not received, and a duplicate of INV-20388.
- Daniel · Finance manager
Approve the monitor adjustment. I'll chase the docking stations.
Approved once · logged with who approved it
It should never pay or post on its own. The adjustment it prepares waits for an approver, who sees the exact lines.
05Set it up
Getting three-way matching right
The check is only as good as the documents behind it.
0 of 8 checked
Sources
- IRAS — Current GST rates
- IRAS — Records that your company must keep
- IRAS — Keeping proper records and accounts
Checked 12 October 2026. Rules and prices change — confirm what applies to your business with the official source.
FAQ
Common questions.
What is three-way matching?
An accounts-payable check that compares each supplier invoice with the purchase order and the goods received note before payment. If item, quantity and price agree on all three, the invoice is paid; if not, it is held for someone to resolve.
What is the difference between two-way and three-way matching?
Two-way matching compares the invoice with the purchase order only. Three-way matching adds the goods received note, so you also know the goods arrived before you pay.
What is a goods received note?
A record made when a delivery arrives of what was received and how many — often the signed delivery order. It is the third document in three-way matching.
What GST rate should Singapore supplier invoices show?
Singapore's standard GST rate is 9%, from 1 January 2024. Only GST-registered suppliers may charge GST. Check iras.gov.sg for zero-rated and exempt supplies.
Can AI do three-way matching?
Yes. An AI agent can read invoices, POs and goods received notes in any format, line them up and list the exceptions with evidence. Collie's finance agent does this on a box in your office, and any adjustment waits for an approver.
Keep reading
