Automated payables matching

Traditional Payables Matching

The classic approach to managing the accounts payable paper flow is to match three documents against each other, as follows:

  • Compare the supplier's invoice to the company's authorizing purchase order to ensure that the pricing terms are correct
  • Compare the purchase order to the receiving documents to ensure that the quantities received match the authorized amount

This comparison process is slow, so many companies try to avoid it by shifting small-dollar payments to procurement cards, or by waiving the matching requirement if the amount of a supplier invoice is small. Yet another alternative is to pay based on the quantity received, and not bother with any supplier invoices.

Automated Payables Matching

If, despite taking these alternative steps, a company still has a fair number of purchases requiring three-way matching, it can consider doing so through an automated process. Doing so requires that the following system components be present:

  • A document management system into which all supplier invoices are scanned as they are received.
  • An automated matching system, as is found in some enterprise resource planning (ERP) systems.
  • A data capture system that extracts information from scanned documents and stores this information in a database for use by the automated matching system. Data capture requires that a number of rules be loaded in advance, detailing such issues as where information is located on a supplier invoice, for each supplier invoice template.

Ideally, this combination of systems should scan all incoming invoices, extract information from them, load it into the ERP system for matching purposes, and schedule the invoices for payment.

A large amount of customization is required before these systems can be relied upon to consistently conduct three-way matching with minimal operator intervention. Typically, the system begins with a low success rate, which gradually increases as the data capture rules are improved to match the requirements of each supplier's invoice.

Given the cost of the systems themselves and the time required to customize them, this solution is only cost-effective in environments that must handle large quantities of supplier invoices.