3-way matching in accounts payable for construction material invoices

A three-way match checks a supplier's invoice against two other documents before you pay it: the purchase order (what you agreed to buy, and at what rate) and the proof the goods arrived (for asphalt, stone and concrete, the delivery, scale or batch ticket). If all three agree on what was bought, how much and at what price, the invoice is clear to pay.

For a paving or site-work contractor the match is harder than the textbook version, because one monthly invoice can carry 40 to 400 tickets. This guide shows the checks, a worked example, and where the hours go.

What is a three-way match?

It is a comparison of three documents for the same purchase: the PO, the receiving record and the supplier's invoice. In a material-supplier month the receiving record is the ticket that rode with each load.

• PO: the agreed rate, the job and, sometimes, a total quantity.
• Ticket: what was delivered. Ticket number, date, material, gross, tare, net quantity, job and PO if printed.
• Invoice: what the supplier now bills, line by line.

The match passes for a line only when the invoice line points to a real ticket, the billed quantity agrees with the ticket, and the billed rate agrees with the PO.

What do you check on each invoice line?

Check these seven things for every line, not for a sample of lines:

1. A ticket exists. Every invoice line has a ticket behind it. A line with no ticket is billed with no proof of delivery.
2. No ticket is used twice. The same ticket number billed on two lines, or two tickets with the same number, date and net quantity, is a duplicate.
3. Quantity agrees. Billed tons or yards equal the ticket's net quantity, within the tolerance you accept.
4. Rate agrees. Billed rate equals the PO rate for that material and job, within a tolerance, often a cent.
5. The PO and job are on your list. A ticket for a job or PO you do not have is either a mistake or a load delivered to the wrong place.
6. The PO has room. Deliveries added up across the month do not exceed the PO quantity, when it has one.
7. The arithmetic holds. Quantity times rate equals the line amount.

Then check the reverse: every ticket you received appears on the invoice, because a ticket that is not billed means a supplier invoice you will see next month, or a load you cannot account for.

How does it work on a real invoice? A worked example

Take an asphalt plant's September invoice with 15 lines, 14 tickets and a four-line PO list. Matching tickets to lines turns up the eight kinds of problem below. The quantities and rates are made-up numbers for illustration.

Each finding carries a dollar amount, so the list can be sorted by what is at stake: a $2.50-a-ton rate difference on 400 tons matters more than a dozen cents of rounding. The free sample shows a list like this, built by the real matcher on fictional data with one of each flag.

Why do tickets not match by number alone?

Suppliers print ticket numbers with prefixes, spaces and leading zeros, and invoices often shorten them. "AP-004417", "4417" and "004417" are the same ticket, but a spreadsheet lookup will call them three. Normalize the numbers first: same case, no prefix, spaces or punctuation, no leading zeros. When a line prints no ticket number at all, fall back to date, material and quantity within tolerance, and treat those matches as ones to look at.

How long does it take by hand?

A trade-blog figure often repeated is about 90 seconds a ticket and about 5% of tickets checked. We cannot verify either, and your own invoice will differ. The arithmetic is simple: a 200-ticket invoice at 90 seconds a ticket is five hours for one supplier in one month. That is why matches by hand end up as spot checks, and a spot check finds only the errors in the tickets it happens to touch.

How do you run a three-way match with software?

Ticket Match does the seven checks above for one supplier invoice at a time. You upload the invoice, its tickets and your PO and job list. In the free run on this page, upload them as CSV or Excel. In the app, text PDFs are read as well, and you check each page against the rows read from it before anything counts. Scanned or photographed pages are not read automatically: you type the ticket number, date, material, quantity, job and PO beside the preview and they are matched with the rest.

The matching itself is fixed rules, not a model's guess, so the same files give the same list. It does not touch your books or contact your supplier. It gives you the list to act on.

What does a three-way match not catch?

• Whether the price on the PO was right. It checks the invoice against your PO, not your PO against the market.
• Taxes and discounts. Ticket Match does not calculate them, and you check them yourself.
• Whether the load was good. A ticket shows what was weighed, not whether the mix was within spec.
• Contract terms. Back charges, fuel surcharges or minimum loads depend on your contract, and a requirement that varies by contract is yours to apply.

What else should you read?

If you are choosing a tool, see construction accounts payable software for how the options differ. If you want to set up the tickets themselves so they can be matched, see the delivery ticket template. Then run the free three-way match on your own files.

FAQ

Is a two-way match enough? A two-way match compares the invoice with the PO only. It cannot show that the load arrived, which is the ticket's job, so for material billed by the load a three-way match is the check that finds missing and duplicate loads.

Who owns the three-way match, AP or the field? It varies by company. The field collects the tickets, AP checks the invoice against them and the PO, and the controller decides which differences to dispute.

What tolerance should I use? Set one per supplier. A quantity tolerance of zero and a rate tolerance of a cent are the starting values in Ticket Match, and you can loosen them where a plant's scale rounds.