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An antidote for exceptions

Error-proof your documents with n-way matching

When your work in AP, a lot of issues can demand your attention. Manual approvals, inconsistent documents, and missing data are all in a day’s work. But nothing takes a bigger toll than the dreaded exception management.

Every time there is a mismatch between your and your partners’ documents, you have to stop all activity and investigate. Is it a manual encoding error (like the wrong PO number)? Is it a product data issue (wrong quantity or price)? Is it a duplicate invoice that may lead to erroneous payments? Or maybe the documents are just missing information.

This doesn’t just consume your department’s time, but also your partners’. They often have to correct and resend documents, delaying approvals and payments. The process is so tedious that a 2020 Ardent Partners study named exceptions „the bane of Accounts Payable”. The same study showed that no less than 62% of AP leaders found exception management to be their biggest challenge, followed by lengthy approvals (51%) and excesive paperwork (40%).

So, is there a way to minimize exceptions? The first obvious step is to automate your Accounts Payable to speed up processing. The second and most important step is to focus solely on exceptions, and avoid lengthy document reviews. This is where matching comes in.

How matching works

Automated document matching allows you to compare the information on received documents such as invoices with that of supporting logistics or procurement documents. The latter can include purchase orders, receipt advices, dispatch advices, and even contracts.

Matching can save you valuable time, while increasing document accuracy and timely payments. Such a process reduces errors and mispayments, while also increasing the transparency of the validation process. Fraudulent invoices and maverick spending are as good as gone, and auditing is accelerated.

If implemented correctly and thoroughly, matching can ensure the consistency of a transaction across your entire supply chain, from contract to payment.

Before you start

To implement automated matching, there are a few prerequisites that a good can help you fulfill.

  • Clean data, meaning that your documents should be standardized and enriched for accurate matching.
  • An electronic catalog, making sure both your and your partner’s product data coincide.
  • A seamless connection between your AP or invoicing solution and your ERP, eliminating any potential manual work.
  • Customizable business rules, as many document workflows may be specific to your company.

Once you’ve settled these, there are two other important aspects you must look into. The first is the acceptable deviation, while the second is dispute resolution.

Deviations appear when the details on your main fiscal document (usually the invoice) do not match those of the supporting documents. Quantity and price deviations are the most common. An acceptable deviation is a deviation that’s well within the accepted norms between you and your partners. For example, if the price drops due to early payment discounts or if the quantity is slightly higher than ordered, you may decide not to contact the vendor and make the payment. Establishing proper tolerance can decrease disputes and exceptions.

If the deviation is high enough to stop the approval, dispute resolution comes into place. Here, you have to decide what should be automated and what should be manually approved. For example, invoices that are missing data or have the wrong order number, can be automatically sent to the vendor with an error message. There’s no need to check an incorrect document!

If the discrepancies are more subtle (like transport documents showing higher quantities than receipt advices), an AP specialist might have to investigate. Even at this stage, the system can make your job easier – it can send only the problematic documents with the highlighted error, to a single responsible person.

Matching scenarios that mitigate exceptions

So, when can matching yield value? To be honest: in any situation. The most common matching scenarios are 2-way matching and 3-way matching. More advanced providers, including DocProcess can even offer n-way matching.

2-way matching simply compares two different types of documents, making sure that their fiscal and product data correspond. The most common implementation is the matching between a purchase order and one or multiple invoices (depending on how the order is delivered). After the data is extracted and standardized from each document, the system automatically compares invoice and order lines, according to pre-established rules. Validated documents are sent into your ERP, while problematic ones enter the approval flow.

 

 

 

 

While comparing invoices and orders is common, our experience shows that 2-way matching has a wider range of uses. For example, for one of our clients, a construction material supplier, we used 2-way matching to compare invoices with e-CMRs from transport companies. This was especially useful since a single invoice corresponded to multiple e-CMRs. To see how much time our client saved in the end, you can simply read our detailed case study.

3-way matching makes sure that invoice information matches the corresponding order, but also the goods receipt note (GRN). Using a triple matching system ensures that you only pay for the goods and quantities you ordered. In other words, your expectations match those of your suppliers.

 

3-way matching

 

 

 

Just like with 2-way matching, there is nothing stopping you from using other documents in the 3-way matching process. A more advanced combination would be matching invoices with GRNs and contract terms. For this, you would also need an integrated contract management solution, but the benefits would be well worth it.

N-Way matching simply designates matching between multiple types of files, which can come in handy for more complex approval flows. It’s an elegant way of saying “we can match any document with any other document”. For it to work, you need an experienced provider with a platform flexible enough to accept all types of documents.

Regardless of your choice, you should always keep in mind that automated matching should save you work, not multiply it. Matching’s final goal is not to add extra layers of complexity, but to validate documents quicker, smarter, and with more accurately. To enable touchless processing.

 

Where to begin with?

DocProcess offers you a Business Ecosystem Automation platform that can automate processes not just within your company, but also across your entire supply chain. Our integrated product suite will allow you to process all types of documents, from invoices and orders, to contracts and logistics documents.

We offer fully automated Accounts Payable functionality, complete with n-way matching and n-level approval flows. Our platform can automatically enrich your documents with any internal or external data reference and it’s compatible out-of-the-box with over 200 ERPs and accounting software.

Thanks to the flexibility of DocProcess BEA, you can easily mix solutions in order to fit your business needs. Feel the need to expand your matching to contract terms? You can add contract lifecycle management with the click of a button. It’s that easy!

So, have you decided yet?