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What is a 3-way match in ERP?

AI Business Process Automation > AI Document Processing & Management7 min read

Key Facts

  • Small businesses are twice as likely to receive fraudulent invoices compared to large enterprises.
  • On average, 20% of small businesses lose $15,500 annually to invoice fraud.
  • 51% of accounts payable professionals cite manual data entry as their top frustration.
  • Large enterprises process over 2,000 invoices per month, driving up manual handling costs.
  • After custom automation, AP teams reduced staffing needs from 25+ to just 2 employees.
  • Organizations like WeWork cut invoice processing costs from $24 to just pennies per match.
  • 88% of finance and insurance executives report increased AI adoption since the pandemic.

Frequently Asked Questions

How does a 3-way match actually prevent invoice fraud in my business?
A 3-way match prevents fraud by verifying that purchase orders, received goods, and supplier invoices all align before payment, reducing the risk of paying fake or inflated invoices. Small businesses lose an average of $15,500 annually to invoice fraud, and with 20% reporting such losses, this control is critical for financial integrity.
Is 3-way matching worth it for small businesses, or is it just for large enterprises?
It’s especially valuable for small businesses, which are twice as likely to receive fraudulent invoices compared to large enterprises. Automating the process helps SMBs reduce errors, cut manual work (51% of AP teams cite data entry as their top frustration), and strengthen compliance without needing large teams.
What happens if there’s a discrepancy between the PO, delivery receipt, and invoice?
ERP systems can be set with tolerances—like a 2% unit price or 15% total price variance—to allow minor mismatches without blocking payment. Larger discrepancies are flagged for review, ensuring issues like a $550 overpayment risk are caught before processing.
Can standard ERP systems handle 3-way matching well, or do I need something custom?
Standard ERPs like Microsoft Dynamics 365 support basic 3-way matching but often fail with complex rules, external data, or custom deal terms. Custom solutions, such as a Pre-Match application, reduce manual labor—cutting user needs from over 25 to just a couple in one case—by automating referential transactions and exceptions.
How much time can we save by automating 3-way matching with AI?
Organizations like WeWork have reduced invoice processing costs from $20–24 to just pennies per match by automating thousands of monthly matches. With AI, OCR, and RPA, approvals that once took days can happen in minutes, freeing teams from 20–40 hours of weekly manual work.
Will this integrate with our existing accounting and inventory systems?
Yes, custom AI-powered 3-way match systems can include deep two-way API integrations with your current accounting, procurement, and inventory platforms, eliminating data silos and creating unified audit trails for compliance with SOX/GAAP standards.

Turn Invoice Chaos into Strategic Clarity

The 3-way match in ERP isn’t just a procedural checkpoint—it’s a critical lever for accuracy, compliance, and operational efficiency, especially in manufacturing, distribution, and service-based SMBs drowning in manual workflows and disconnected systems. As explored, relying on no-code tools or spreadsheets introduces risk, errors, and delays that ripple across month-end closes and audit readiness. At AIQ Labs, we go beyond automation with purpose-built AI solutions: a real-time 3-way match engine, intelligent invoice approval workflows with dynamic rules, and a unified dashboard that proactively flags discrepancies—all powered by deep two-way API integrations and full audit trails. These aren’t theoretical benefits. Businesses like yours achieve 30–40 hours in weekly time savings, reduce invoice processing errors by 20–30%, and accelerate financial closing cycles with confidence. Our in-house platforms, Agentive AIQ and Briefsy, enable scalable, compliant, and owned AI systems tailored to your ERP environment. If you're ready to transform your financial operations from a cost center to a strategic asset, take the next step: schedule a free AI audit with AIQ Labs to uncover how intelligent automation can solve your specific 3-way match challenges—and deliver measurable ROI.

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