Three-way matching – checking purchase order, delivery, and invoice step by step
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Three-way matching is an internal control where companies compare three documents before payment: purchase order, received delivery, and supplier invoice. The purpose is to detect errors in price, quantity, delivery, and billing before an invoice is approved.
Key points in brief: First check what was ordered, then what was actually received, and finally what the supplier is invoicing. Discrepancies must be investigated and documented before the invoice is approved according to the company’s authorization policy. Three-way matching is a control method – not a general legal requirement for exactly three documents for every purchase.
What is three-way matching?
Three-way matching is a method for comparing the price and terms on the purchase order with the invoice, while simultaneously comparing the invoiced quantity with the actual quantity received. It is particularly suitable when the company orders goods, materials, and inventory, or handles large volumes of supplier invoices.
The difference from two-way matching is that two-way matching typically checks the purchase order against the invoice. Three-way matching adds a documented receipt verification, which can reveal an invoice for goods that were not delivered.
The three documents – a quick overview
| Document | What it shows | Control question |
|---|---|---|
| Purchase order | Ordered item, quantity, price, and terms | What did we actually order? |
| Delivery receipt / receiving report | Actually received and inspected quantity | What has arrived and been accepted? |
| Supplier invoice | Invoiced quantity, amount, surcharges, and VAT | Does the invoice match the order and delivery? |
How to perform three-way matching step by step
- Register the purchase order. Assign a unique order number and document the supplier, item, quantity, price, delivery terms, and the responsible purchaser.
- Confirm receipt. Note the delivery date, actual quantity received, any damages, backorders, and who inspected the delivery. A delivery note number alone does not always prove that the goods have been approved.
- Register the invoice. Match the supplier, invoice number, and order number. Check that the same invoice is not already registered.
- Compare price and quantity per line. Reconcile the order price against the invoice price and match the invoiced quantity with the approved received quantity. Also check freight, discounts, and other agreed-upon charges.
- Mark discrepancies. Document differences in quantity, price, currency, VAT, or terms. Specify the responsible investigator and any decided tolerance.
- Investigate before authorization. If necessary, request a completed delivery, credit note, corrected invoice, or documented decision according to the authorization policy.
- Archive traceably. Maintain the connection between order, receipt, invoice, control result, and approval in the company's document and accounting process.
Example: the invoice refers to more items than the delivery
The company orders 20 components at 500 SEK each, totaling 10,000 SEK excluding VAT. The receipt shows 18 approved components. The supplier invoice refers to 20 components and 10,000 SEK excluding VAT.
| Comparison | Quantity | Amount excl. VAT |
|---|---|---|
| Order | 20 | 10,000 SEK |
| Approved delivery | 18 | 9,000 SEK |
| Invoice | 20 | 10,000 SEK |
The discrepancy is two components, corresponding to 1,000 SEK excluding VAT. Investigate whether there is an approved partial delivery, an agreed-upon prepayment, or if the invoice should be corrected. Which amount should be paid is determined by the parties' agreement and actual circumstances – not solely by the control matrix.
When is two-way matching more appropriate?
For certain service purchases, a traditional goods receipt document is missing. In such cases, a verified timesheet, service report, accepted milestone, or an authorization document can replace the physical delivery receipt. Determine the control level based on purchase type, risk, amount, and internal routines.
Checklist before approving an invoice
- Are the correct supplier, order, and invoice numbers used?
- Do the invoiced prices, quantities, and any discounts match?
- Are receiving inspections, partial deliveries, and backorders documented?
- Are freight, VAT, surcharges, and currency reasonable and correctly specified?
- Have any discrepancies been investigated and approved by the right person?
- Has the control been documented in a way that can be followed up later?
Common mistakes in three-way matching
- Approving the invoice even though the receipt has not been registered.
- Only comparing the total sum and missing incorrect line prices.
- Not handling partial deliveries and backorders separately.
- Allowing vague tolerances without a named decision-maker.
- Lacking a connection between discrepancies and credit notes.
- Allowing the same person to order, receive, and perform final authorization without compensating controls where the risk level requires a clear division of responsibilities.
Frequently asked questions
Is three-way matching a legal requirement in Sweden?
No, there is no general requirement that all Swedish companies must use exactly this control method. However, companies need to maintain orderly accounting and documentation. This control method can contribute to reliable and traceable purchasing processes.
What is the difference between two-way and three-way matching?
Two-way matching typically compares the purchase order and the invoice. Three-way matching also verifies the actual receipt or approved performance.
What happens if the invoice and the delivery do not match?
The discrepancy is investigated and documented. Depending on the agreement and circumstances, the action could be a corrected invoice, credit note, backorder delivery, or other approved decision.
Can you work with three-way matching in Excel?
Yes. A register can track order numbers, approved receipts, invoice lines, reasons for discrepancies, responsible persons, and authorization status. However, the control register does not replace the company’s regular accounting.
Document the entire control chain
Use a unified template for purchase orders, delivery matching, invoice control, and discrepancy logs in Excel, Word, and PDF.
See Three-Way Matching – Purchase Order, Delivery & Invoice →
Related guides and templates
- Authorization policy in companies – invoices and permissions
- Bank reconciliation step-by-step – account 1930
- Supplier agreements – quality and delivery responsibility
- Goods receipt protocol and delivery inspection
- Templates for purchasing, suppliers, and service
Sources and further reading
- Microsoft Learn – examples of three-way matching policies
- Microsoft Learn – validation of supplier invoices
- Swedish Accounting Standards Board (BFN) – guidance for accounting
Updated: October 13, 2026. The guide describes a practical control method and is not individual legal or accounting advice. Application must be adapted to agreements, operations, and current accounting rules.
