MineralTree’s Award-winning AP Automation Solution Just Got Even Better with Automated Purchase Order Matching.
The traditionally painful and time-consuming process of comparing purchase orders to invoices has been transformed in a way that provides total efficiency and complete visibility to your accounts payable department.
What is Purchase Order (PO) Matching?
Purchase order matching is an accounts payable process for invoice approval that involves checking the line items of an invoice with the goods and services of a purchase order. When this process only involves matching purchase orders to invoices, it is called “two-way matching.” Although there is also three-way matching and four-way matching, two-way matching is the most common.
What is a Purchase Order Exception?
An invoice exception occurs during the purchase order (PO) matching process when the details on the invoice do not match the supporting documentation. The two most common exception types are:
- Quantity Exception: When the number of items invoiced does not match the amount on the purchase order and/or goods receipt (GRN).
- Price Exception: When the item price on the invoice does not match the item price stated on the purchase order.
Typically, when an exception is identified during the purchase order matching process, an investigation is needed to determine whether this is an acceptable deviation and the invoice can be paid out or if the supplier needs to be contacted in order to correct the error. With automated purchase order matching, your accounts payable team can stipulate acceptable margins of error and any mismatches can be routed through a dedicated exception-handling workflow for resolution.
What is Automated Purchase Order Matching?
Automated Purchase Order (PO) matching is a feature in MineralTree Invoice-to-Pay that streamlines the process of reconciling invoices to the appropriate purchase orders with a groundbreaking matching algorithm.
Upon receiving an invoice, Mineraltree extracts invoice data, and automatically compares the invoice line items with PO data that is synced from your accounting system. When corresponding PO data is found, MineralTree’s software evaluates whether the lines match or not, and flags any disagreement.
How Does MineralTree’s Automated PO Matching Work?
MineralTree’s Automated Purchase Order (PO) Matching functionality significantly reduces the time required to process supplier invoices by algorithmically matching them to purchase orders. When this feature is enabled, every draft invoice created will be put through a linking process in which MineralTree automatically attempts to link each invoice line to a PO line.
This linking engine runs continuously in the background. It will also be triggered each time that an unrecognized vendor name is validated. For best results, MineralTree considers all PO and invoice lines for a given vendor when running the linking process. The accounting manager and other authorized users can then review the results and make any needed adjustments or resolve exceptions.
See Automated Purchase Order Matching in Action:
What are the Benefits of Automated Purchase Order Matching?
If you value time and efficiency, then you should be leveraging Automated PO Matching. Here are four more benefits that your business could see by automating your purchase order matching process:
- Save Time for Employees – One of the major drawbacks of two- and three-way purchase order matching in accounts payable is the amount of time it takes team members to print, compare, and verify the individual pieces of data on each invoice or purchase order, especially line item data. By automating this process, employees are able to reallocate their time to more value-add areas, assured that invoice and purchase order data is automatically verified and only exceptions are flagged for manual verification.
- Improve Supplier Relationships – When communication and interactions between a business and their suppliers are unencumbered by errors, lost invoice data, or delays, the relationship is improved. While avoiding payment delays can also open opportunities for early payment discounts, it also means maintaining a good relationship with suppliers, which may open the door for preferential pricing or improved contract terms.
- Protect Against Payment Fraud & Duplicate Payments – Automation means that invoice and PO data are verified consistently throughout the matching process. The automation solution will work in the background of your AP department, ensuring that your business is not overpaying on invoices or paying for duplicate items. This process also protects against payment fraud and unauthorized purchases. Inconsistencies are automatically flagged for manual approval.
- Be Prepared for Audits – Purchase orders (POs), Goods Received Notes (GRNs), and invoices are some of the most frequently requested documents that auditors ask for. Automated PO matching means that these documents are seamlessly approved, matched, and organized in a central location. Your business will be audit-ready any time of day.
With this feature, your AP department will no longer need to manually compare purchase orders with every invoice that you receive. Instead, you can rely on MineralTree to do this. Plus, we’ll highlight any discrepancies for review and reconciliation in a dedicated exception-handling workflow.
This critical task of verifying invoice amounts before payment will still receive all of the necessary attention it warrants, but will only require your accounts payable team’s intervention when it is absolutely necessary.
In addition, MineralTree enables you to set tolerance levels for mismatches.
By setting tolerance levels, you can account for slight disagreements that are a result of minor over/under estimation on the part of your vendor. When an invoice comes with a discrepancy that is within the range of your set tolerance level, it will move through the approval process without requiring any further attention.
The automated PO matching feature ultimately serves as another step forward in MineralTree’s mission to eliminate all inefficiency from the end-to-end accounts payable process.
To see what Automated Purchase Order Matching looks like in your AP Process, schedule a demo here.