Sachin Sharma of ProcureDesk breaks down why three-way match invoicing overwhelms AP teams and how to fix it. Automate exception handling with OCR and rules, set tolerance thresholds like auto-approving variances under $10, and work with repeat-offending vendors to fix root causes instead of treating every mismatch as fraud.
Let's say you recently implemented a three way match invoicing process and all of a sudden your AP team is bombarded with exceptions, right? So invoices are not getting processed because the price doesn't match what's on the purchase order or the quantity is over what's on the purchase order and so on. And all of a sudden the team feels overwhelmed. And that's a very common scenario when you start implementing a three way match process. So in this video I'm going to walk you through a three step process on how to think about three way match and how to make sure that you're setting your team up for success. If you're joining me for the first time, welcome. My name is Sachin Sharma. I am the founder of Procuredesk where we help growing companies control spending through purchasing an AP automation. So let's jump right in. Step one which, where it always starts is the manual process process, right? Invoice comes in and then AP needs to figure out why it doesn't match. So let's say the price is off. Okay, now why the price is off. Now they need to figure out who ordered the product and who can reach out to the vendor to figure out why the price is different. And most companies are doing it manually to start with, right? So now imagine rather than just processing the invoice, your team now have to look at all those exceptions and, and most of the time what happens, they just park it on the side and say we'll look at it later. And then comes the month end process and then you have a bunch of invoices that are not matched and now working weekends to resolve the problems, right? So that brings me to step two is how do you avoid that manual process is to implement a automated three way match process. I would not recommend doing three way match manually because it just over a period of time your team can't handle invoices that fast. If you're processing let's say 10, 20 invoices or 15 voices a month, fine. But if you are over 100 invoices implement technology to automate that. So what do I mean by automation? Think about having a process where invoice comes in, it runs through like an OCR or any technology where the system can figure out what's in the document, match it with the po, match it with the receipt and identify what's wrong. Let's say price is off, then the second sub step under that is you should not assume that now you got to go figure out why and who needs to solve that, that should be decided upfront. So for example, if there's a price exception, I should route it automatically to the buyer because the buyer is the one working with the vendor. Or if you have a procurement team, then the procurement team gets involved and so on. If it is a receipt Exception, you ordered 100, your receipt says 100. Invoices say 150. Maybe you want to reach out to the warehouse team or to have them confirm that they actually receive 100 and not 150. So those are the rules that you must define upfront. That way it's not just matching it, but also the system knows what to do next. The third thing you can do is set up tolerances. Sometimes it just happens that you know you're okay with the price variance because you know it's not worth spending the time or maybe it's a one off. So let's say if the variance is less than $10, automatically approve it. Right? So you're not holding up the process. So those are a couple of strategies where automation can help. Now that brings me to step three, avoid treating every variance as a fraud. So what do I mean by that? Let's say the price is off. Very common scenario. You order something for 50 vendors, send it for, you know, $50.20 or $50.40. Now if you're buying one widget, it doesn't matter, but if you bought thousand, yes, it matters. Right. And the immediate I would say reaction from an AP team could be, geez, why the vendors sending, you know, they are intentionally trying to do it. And rather than asking that question, I think you should just look at it and say, who are the vendors who always have this problem? Right. And typically what we see is there's always a broken process on the vendor side which is causing those price variances to happen. So if you look at it more for how do we make sure that we first of all identify the top vendors where we have these challenges, price variances or quantity and how many times that is happening. And then third is working with the vendor to identify why they keep on having these problems. Because it is always also in the vendor's interest to solve those problems. Because then the invoice gets processed faster, they get paid faster and so on. Right? So think about win, win in this case on both sides and have that mentality of let's try to solve the problem rather than saying, hey, why the vendor is always sending me the these additional expenses and things like that. Right? So if you're starting with the invoice matching process and it's not working or your team is feeling overwhelmed, here are the three things you should do right Avoid being the manual detective. Right Implement technology or automation to do the match and have predefined rules. And number three is avoid treating everything as a fraud. So if you like this video, feel free to hit the subscribe button so you get notified next time when we release something like this. And thanks for joining me today and I'll see you in the next video.
