Before a supplier invoice is paid, businesses need to confirm that the amount being billed is consistent with what was ordered and received. In SAP S/4HANA, this control is supported by the Three-Way Match.
How the Three-Way Match Works
- Purchase Order (PO)
- The PO defines what was ordered, including the supplier, material or service, quantity, price, delivery details, and payment terms.
- Goods Receipt (GR)
- Once the goods/services are received, the receipt is posted against the PO. This records the quantity received and updates the relevant inventory and financial records.
- Invoice Receipt (IR)
- When the supplier submits an invoice, it is verified against the PO and goods receipt before payment processing.
PO → GR → Invoice → Matching → Payment
What Happens When There is a Difference?
SAP checks for discrepancies in areas such as quantity and price.
If the difference falls within the configured tolerance, the invoice can proceed without requiring additional intervention. If the variance exceeds the allowed tolerance, the invoice can be blocked for review.
This helps prevent issues such as:
- Being invoiced for more than what was received
- Incorrect supplier pricing
- Invoice amounts exceeding the PO
- Unapproved payment variances
Why It Matters
Three-way matching gives Procurement and Finance a connected control from purchase to payment. It helps improve invoice accuracy, reduce payment errors, and strengthen financial controls. With SAP S/4HANA Public Cloud, businesses can integrate purchasing, goods receipt, and supplier invoice processing within one ERP environment providing greater visibility and control over the Procure-to-Pay process with confidence.