Spending too much time manually matching invoices with purchase orders? You’re not alone. Many accounts payable teams struggle with slow, error-prone processes that drain productivity and increase the risk of overpayments.

If this sounds familiar, it might be time to invest in invoice matching software. Automating this process can cut invoice processing time by 30% to 50%, freeing your team to focus on more strategic tasks.

In this guide, we’ll walk you through everything you need to know about invoice matching software—how it works, what to look for in invoice matching automation software, and how it can transform your accounts payable workflow. 

By the end, you’ll have the insights you need to choose the right solution for your business.

ProcureDesk simplifies the process by automating invoice capture, matching, approvals, and payments—all in one system. Our experts can show you how our AP automation streamlines your workflow, reduces errors, and saves time. Click here to see ProcureDesk in action!

What Is Invoice Matching Software?

Invoice matching software automates the invoice matching process. Whether you are performing a three-way invoice match (Invoice, purchase order, and receipts) or a two-way invoice match (invoice and corresponding purchase order), the software automates the manual process of invoice management. 

An invoice-matching software provides you with the following benefits:

• Reduce the time spent processing invoices by providing a real-time invoice matching process. You can reduce the invoice processing cost by 30-50% on average.
• Reduce the risk of late payment fees or making duplicate payments. 
• Pay vendors faster and achieve and avail of early payment discounts. You save money and improve your supplier relationships.
• A touchless invoice process by leveraging artificial intelligence and e-invoicing.
• Handle the increased invoice volume without adding headcount.

How to Choose the Best Invoice Matching Software

Let’s look at the key features and functionalities of invoice-matching software. We will use our invoice matching software, ProcureDesk, to highlight the key features, but you can find these features in any leading AP automation solution. 

Invoice Data Capture Through Emails

The first step in the invoice matching process is capturing all supplier invoices in one central location.

Typically, vendors send invoices via email, but they may send them to different stakeholders—operational teams, procurement, or even through traditional mail. This scattered approach increases the risk of lost invoices and delays in processing.

To streamline this, set up a dedicated email address for accounts payable, such as Invoices@acmedesign.com, and instruct all vendors to send invoices there. We will also cover an advanced strategy later on how to use an electronic invoice process to eliminate emails. 

Your invoice matching software should automatically retrieve invoices from this inbox and create them in the system.

Here is what to expect:

• No need to manually upload each invoice, as invoices are automatically uploaded. 
• No lost invoices and last-minute invoice escalations. 

Automated Invoice Creation And OCR (Optical Character Recognition)

Why create an invoice manually when an AI-powered tool can handle that for you? ProcureDesk AP solution leverages OCR and machine learning processes to create the invoice from the supplier invoice. It can pull data from different formats like PDF or a Word document.

It pulls the header and line item details and matches them to an existing purchase order and other related documents. 

In the case of non-PO invoices, automated invoice creation is very helpful, especially with recurring invoices.

For example, you have a monthly rent payment. So, instead of creating a new invoice every month, you can use the automated invoice creation feature to generate the invoice and submit it for approval.

Set it and forget it, and let the system do the rest.

Here is how this works in ProcureDesk:

How does this help?

• Your team can process invoices faster without any manual data entry.
• It leads to a lower error rate because the system pulls data from the purchase order and then matches it with the purchase order for accuracy.

Supplier Portal

What if you can completely avoid entering and reviewing invoices?

Then, a supplier portal is a must-have feature for you. 

With a supplier portal:

• You can enable self-service for your suppliers.
• Reduce the time spent on invoice validation and exception handling. 
• Reduce the time spent on answering queries about payment status. 

Suppliers can log in to a portal to see all the open Purchase orders.

Example of supplier portal:

They can then create an invoice by simply flipping the purchase order to an invoice and attaching a copy of the invoice.

Once the vendor submits the invoice, the system does the rest.

All you have to do is review the invoices in case of exceptions between purchase orders, invoices, and receipts.

Automated Matching Rule Engine And Approvals

So far, we discussed features that help you speed up the invoice creation process.

Now, let’s discuss what helps you speed up the matching process between invoices and documents like purchase orders and receipts.

There are two types of matching scenarios:

2-Way Matching

When purchasing services, there’s no physical receipt. Instead, your invoice system should match the invoice against the purchase order and flag any discrepancies, such as mismatched unit prices.

If a discrepancy is found, the system should automatically route the invoice for approval. Ideally, the approval should come from the person who requested the service, as they can confirm whether it was delivered as expected.

Additionally, the system should support exception approvals. For instance, if the invoice amount exceeds the approved amount, it should trigger an approval workflow to ensure proper authorization before processing the payment.

3-Way Matching

With a 3-way matching, the system can match purchase orders, receipts, and invoices.

The Invoice-matching engine should be able to handle the following scenarios.

• If a receipt is missing, automatically route the invoice for exception approval.
• If the quantity exceeds the received amount, route it to the buyer for review and approval.
• If the unit price doesn’t match, then route for review and approval to the purchasing team so that they can work with the vendor to resolve the discrepancy.

Here is an example of a 3-way match:

How does this help?

With an automated invoice matching engine, your team benefits as follows:

1. Increased productivity as you don’t have to chase stakeholders for invoice approvals. The system automatically does the routing for you.
2. There is a complete audit trail of why an exception was approved and who approved it. This information is very handy when the auditors want to review the controls.

Tolerance Matching

Tolerance matching allows you to automatically accept certain invoices if they are within an acceptable range.

Let’s say you don’t add taxes on purchase orders; vendors always add taxes on the invoice.

With the added tax, the total invoice amount is always greater than the purchase order amount.

Normally, a stakeholder must be approved before the supplier can pay.

With a tolerance engine, you can set a tolerance so the system ignores this exception while matching.

You can set tolerance not just for taxes but also for unit price, quantity, etc.

Here is an example of tolerance matching:

How does this help?

With an automated tolerance engine, you can:

1. Automated the exception review process for certain invoices
2. You can process invoices much faster because now fewer invoices need additional approvals.

Automated Reminders

It is not uncommon for the stakeholders to forget to approve the invoices in their queue. We all are busy!

So rather than the AP team chasing stakeholders for invoice approval, let the system send automated reminders to employees who have not yet approved their invoices.

How does this help?

Automated reminders help you optimize the invoice approval process:

1. Free your team from chasing stakeholders for invoice approvals.
2. Speeds up invoice processing and allows you to close books on time.

Approval workflow For Non-PO Invoices

Not all invoices have a purchase order. For example, you are paying for legal or other professional services.

So, the invoice matching process doesn’t work here because there is no other document to match the invoice.

You don’t want another system to manage non-PO invoices, so your invoice-matching software should have the following capabilities:

1. Allow a non-PO invoice to be created and coded to the right chart of accounts.
2. Allow an invoice to be routed for approvals based on different conditions. For example, route the invoice based on the dollar amount or the department to which it belongs.
3. Post-approval, send the invoice to the accounting system for payment. The system should support integration with our accounting or ERP system so that you don’t have to enter the data into the system manually.

Here is an example of an invoice workflow:

How does this help?

With non-PO invoice approval, you can streamline your invoice matching process:

1. Employees don’t have to use a different system for PO and non-PO invoices. You have one system to manage and approve all your invoices.
2. With the non-PO invoices in the same system, it is easy to keep track of spending against the budgets.

Mobile App for anywhere, anytime invoice approval

ProcureDesk’s mobile app accelerates the approval process by allowing managers to review and approve invoices on the go. 

No more delays due to out-of-office bottlenecks—approvers receive instant notifications, can review matched invoices, and approve or reject with a single tap. 

Automating the Supplier Payment Process

An automated supplier payment process within your invoice matching software eliminates manual payment tasks, reduces errors, and ensures vendors are paid on time. Without automation, AP teams waste hours processing payments, increasing the risk of duplicate or late payments.

ProcureDesk streamlines payments by matching invoices, approvals, and purchase orders in one system. Once an invoice is approved, ProcureDesk automatically schedules and processes payments through integrated accounting systems, ensuring accuracy and compliance.

Integration with ERP or accounting systems

Seamless integration with ERP or accounting systems is essential for efficient invoice matching. 

ProcureDesk automatically syncs invoice data with platforms like QuickBooks, NetSuite, Xero, Sage Intacct, and other systems, eliminating manual data entry and reducing errors. 

This ensures that purchase orders, invoices, and payments are always aligned, providing real-time financial visibility. 

What Are The Benefits of Invoice Matching Software?

Having looked at the different types of invoice-matching software features, let’s cover the top 3 benefits of automating the invoice-matching process.

Understanding the benefits would help you in building the automation business case. In addition, it would also help your payable team streamline their tasks and responsibilities.

You can also use these as key KPIs to track the impact of invoice process automation. Here are the top 3 benefits:

Productivity Improvement Of The Accounts Payable Department

The obvious benefit is improvement in AP team productivity by eliminating manual and time-consuming activities; here are some additional benefits:

1. The AP team spends less time creating and matching invoices to purchase orders and receipts.
2. You eliminate the need to approve invoices linked to approved purchase orders.
3. There are fewer data entry errors because the system automatically populates the important data from the purchase order.

So, how do we measure the impact of automating the invoice matching software on productivity?

On average, an invoice costs $15 (Accounts Payable benchmark) to process using human intervention alone.

Let’s say you process 200 invoices per month. That is a monthly cost of $3,000 ($15*200).

Let’s say you, on average, can reduce this cost by 30% due to automation and skipping manual intervention.

That is approx—$ 900/month in cost savings.

Better Visibility And Compliance

Invoice matching increases productivity and increases compliance.

By matching the document electronically, you keep an online record of how the document was matched and issues were resolved (if any).

During the audit season, instead of searching for your emails and providing evidence of control. You can point the auditors to the invoice-matching software.

Online audit information provides relevant financial control information to the auditors.

How to quantify results?

Sleeping without worry about cost controls is priceless!

Capture Early Payment Discounts

The third benefit of invoice matching software is that it speeds up the time it takes to process invoices.

Since invoices are processed faster, you can pay your vendors faster.

You pay $500,000 monthly at Net 30 terms, and your vendors offer an early payment discount.

For example: 2% 15 Net 30.

The vendor would offer a 2% discount if the invoice is paid within 15 days.

That is a savings of $10,000.

Some of you might be thinking, what if I don’t have enough cash flow to pay the vendor?

What If I use AR (Accounts receivable) to finance AP (Accounts Payable)? In other words, you are borrowing capital to pay off your liabilities (vendor invoices).

These are valid points; let’s do some math.

Suppose your annual WAC(Weighted Average Cost of Capital) is 15%.

And assume you pay $500,000/month earlier than when it is due.

With the above example of 2% 15 Net 30, you would pay this invoice 15 days sooner.

The cost of capital is $3,082

Cost of capital =( .15/365)*(15)*(500,000)

The savings from early payment discounts = $10,000 (.002*$500,000)

Even with paying 15 days earlier, you are still saving approx. $7,000

That is $84,000 in annual savings!

Related: Invoice Automation: A Powerful Tool For Streamlining Your Business

FAQ’s – Invoice matching Software

What Is Invoice Matching?

Invoice matching is the process of matching supplier invoices with documents so you can verify whether or not an invoice is valid.

As mentioned above,  this process can be quicker and easier with the use of invoice matching software.

The related documents are generally listed on the invoice so the Accounts Payables (AP) team can easily match them with the relevant documents.

The related documents generally include the following

1. Purchase order
2. Receipt

You have created and sent a purchase order to the vendor.

A purchase order looks like this:

The vendor then invoices against that purchase order.

Receipt (a.k.a good receipt note) is the proof that the product has been delivered and accepted.

A receipt document is the proof of delivery, and one can also include a packaging slip that came with the package.

Depending upon the type of purchase, the matching can be defined in two categories – 2-way matching and 3-way matching.

Related: Invoice Matching Process – A Complete Guide To Optimization

What Is A Two-Way Invoice Matching?

As the name suggests, a 2-way matching process includes matching two related documents.

The two related documents are

1. Purchase order
2. Invoice

When is A Two-Way Invoice Matching Used?

A 2-way matching process is used for non-tangible item purchases—for example, professional services.

When you purchase a service, no tangible product can be received.

Hence, there is no receipt created.

Since there is no receipt, you can only match two relevant documents (Purchase order and Invoice).

Here is how the process works:

1. After the purchase request is approved, a purchase order is issued to the vendor.
2. The vendor generally acknowledges the purchase order, confirming whether they can deliver the product or service as per the buyer’s requirement.
3. The vendor performs the service and issues an invoice to the customer.
4. The customer then matches the purchase order and invoice and sends the invoice for payment.

What Is Matched?

In a 2-way match, you are verifying the following information

• Whether the price mentioned on the invoice matches the amount on the PO, for example. You raised a PO for window cleaning services for $5,000. Then, by matching, you confirm that the invoice is indeed for $5000.
• Whether the quantity matches what you have on the purchase order.

For example, you have requested 5 hours of consulting services at $250/hour. Now, by matching the invoice with the PO, you can verify whether the invoice is indeed for 5 hours.

What Is A Three-Way Matching?

In a 3-way matching process, you match three associated documents to confirm whether the invoice is ready for payment. The three documents are:

1. Purchase order
2. Receipt
3. Invoice

When is A Three-Way Invoice Matching Used?

A 3-way match process is used in the case of tangible products. For example, you are purchasing a new laptop.

Here is how the 3-way process works:

Here is how the 3-way invoice matching works:

1. A purchase order is issued to the vendor
2. The vendor ships the product.
3. The product is delivered, and the buyer creates the receipt in the system, a.k.a GRN (Goods Receipt Note)
4. When the vendor sends the invoice, the invoice is uploaded and matched against the PO and the receipt.
5. If all three documents are matched perfectly, the invoice is sent for payment and paid per agreed payment terms.

What Is Matched?

In a 3-way match process, the following items are matched

Quantity

When a vendor sends the invoice, it mentions the quantity they are invoicing for. You are confirming the following by comparing the unit quantity across purchase orders, receipts, and invoices.

1. Did we receive the product that the vendor is invoicing for?
2. Did they under or the ship the product

Unit price

With the unit price, you are matching the unit price on the PO and invoice so that you can answer the following question.

Are we paying what we agreed to pay on the PO?

What Is A Four-Way Invoice Matching?

A four-way invoice matching follows the existing steps and processes done in a three-way invoice matching. The only difference is it adds one more layer of verification for optimized accuracy and controls over your accounts payable process.

Here’s what it involves:

1. Invoice: The document from the supplier detailing the goods or services provided and the cost.
2. Purchase Order: An official document issued by your company outlining the agreed-upon order with the supplier, including price, quantity, and delivery terms.
3. Goods Received Note (GRN): A document confirming your company’s physical receipt and acceptance of the goods or services.
4. Inspection Report: This documents quality checks or verifications on the delivered goods or services, often including quantity verification and acceptance/rejection of discrepancies.

Here’s how the process works:

The software or manual matching process compares data points across all four documents, ensuring consistency in:

• Prices: Invoice matches purchase order and GRN price.
• Quantities: Invoice, purchase order, and GRN quantities match or fall within predefined tolerance levels for partial deliveries or minor fluctuations.
• Descriptions: Invoice descriptions match purchase order and GRN descriptions.
• Quality: Inspection report confirms acceptable quality or identifies discrepancies.

The Bottomline

Undoubtedly, an invoice matching software is a game-changer for your business. Not only does it offer you with accuracy and efficiency, but can even boost your company’s cost savings.

Whether you’re a small startup or a large corporation, it’s about time to explore the benefits and advantages that invoice matching software can bring your business.