Automation of invoice quadrant.

May 8, 2014 | Invoice Management

In the accounts payable process the accounting of provider invoices is a task that puts a heavy demand on resources. The invoices with purchase order process takes up 65% of the area resources. Automating the process involves proceduralizing adequately and efficiently both the matching and exception resolution tasks. The use of invoice workflow tools helps with this task.

Let’s look at the automation of matching.

Invoice matching automation

The process improvement translates into direct savings. In a company with 100,000 invoices per year, for each 10% of invoices automatically matched, a resourced is saved.

A standard implementation, such as those provided by the main ERP manufacturers, achieves 40% invoice squaring ratios automatically. Achieving 85%-90% squaring percentages is not so difficult if we use the right tools and processes.

The difference between both options depends on the types of use supported in the matching and the imposed design limitations. Generally, the matching motors only support matching in two ways, one invoice-one purchase order and matching by total.

What do we have to take into account if we want to break the barrier of 90%?

We are going to separate the points to consider into the three phases of matching: localization of order and/or entry (three way matching), matching by total (matching invoice to order/entrance by amount totals without taking positions into account) and matching by line.

  •  Localizing the order and/or entry. 

  • The data of the order number and/or entry are not always identifiable in the invoice or are erroneous. The use of alternative elements for order search like: part of number, delivery dates, purchase amounts, delivery address, allow for its localization and later treatment.
  •  Matching by Total. 

  • Totaling is understood to mean the balancing of invoice against purchase order/receipts by amount totals without taking items into account.
  • More than 20% of invoices refer to more than one order, contemplating the possibility of automatic invoice matching against several orders significantly increases the matching ratio. As for the tolerances to be applied, supporting complex amount tolerances versus fixed or linear tolerances improves the matching rate and mitigates the risk (1% is not the same for 100€ as for 10,000€ and 2€ may be excessive for an invoice of 100€ but insufficient for an invoice of 10,000€).
  •  Matching by line.

  • The true differentiator in automatic matching resides in the capacity to match at the line level and the combinations of invoice lines – order line – supported entries. Here we detail some of the points to consider:

    • Support both two way matching (2W Match) and three way matching (3W Match)
    • Support automatic matching of invoice ‘n’ lines with purchase order ‘m’ lines on different purchase orders.
    • Possibility to match part entries.
    • Support partial consumption of orders.
    • Allow the localization of lines based on alternative elements, product code is not always identifiable on the invoice nor coincide with that used internally.

Additionally, the possibility of parameterization and specialization of provider level matching is a defining element of a quality process.

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