Two Way, Three Way and Four Way PO Match in Oracle

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Two Way, Three Way and Four Way PO Match in Oracle

One of the fundamental controls in Payables is the PO match. This simply means that the invoice you enter in the application is matched to the Purchase Order. If the match is not successful, the invoice is kept On-hold. On-Hold invoices cannot be paid. The hold has to be resolved before you can pay the Invoice. The PO Match functionality ensures you only record and pay invoices that are eligible for payment. It is a very simple & powerful feature that prevents your organization from paying incorrect & fraudulent invoices.

Now that we understand why we perform a PO match, let’s look at the different methods of PO Match. Depending on your business requirement, you would perform a two-way, three-way or four-way matching.

• Two-Way Match: In a two way match, you compare two attributes from your invoice with the Purchase Order. The invoices is considered to be successfully matched (matched within tolerances) when
  • The Quantity Billed (on the Invoice) is less than or equal to the Quantity Ordered (on the Purchase order)
  • The Invoice Price is less than or equal to the Purchase order price.
• Three-Way Match: In a three-way match, in addition to the two match conditions mentioned above, you also check the quantity received. So the three conditions that are checked are
  • The Quantity Billed (on the Invoice) is less than or equal to the Quantity Ordered (on the Purchase order)
  • The Invoice Price is less than or equal to the Purchase order price.
  • The Quantity Billed (on the Invoice) is less than or equal to the Quantity Received against the Purchase Order
• Four-Way Match: In a four-way match, you add one more match condition to the three-way match. Not only do you check the quantity received, but you also check the quantity accepted. All the four conditions that are checked in the four-way match are
  • The Quantity Billed (on the Invoice) is less than or equal to the Quantity Ordered (on the Purchase order)
  • The Invoice Price is less than or equal to the Purchase order price.
  • The Quantity Billed (on the Invoice) is less than or equal to the Quantity Received against the Purchase Order
  • The Quantity Billed (on the Invoice) is less than or equal to the Quantity Accepted against the Purchase Order

In a tabular format, the match approval level options can be represented as follows

	Invoice	Purchase Order
Two-Way	Invoice Price	PO Price
	Invoice Quantity	Quantity Ordered
Three-Way	Invoice Price	PO Price
	Invoice Quantity	Quantity Ordered
		Quantity Received
Four-Way	Invoice Price	PO Price
	Invoice Quantity	Quantity Ordered
		Quantity Received
		Quantity Accepted

Most organizations opt for a three way match. This also ensures that the quantity is received in the system before an Invoice is created and also helps ensures that the Open PO information is up-to date.

The quantity and price tolerances set up in your system also plays a major role in determining if it is a match or if the invoice should be put on hold. Note that the match has to be within the tolerances. For example if the ordered quantity is 100 units, tolerance is 5% and if you invoice 103 units, the system will accept it as a match because it is within the tolerance level.

Where to setup the PO-Matching option?
You setup the match approval levels in the

• Purchasing Options
• Supplier Level
• Supplier Site Level
• Purchase Order Shipment level

Purchase Order shipment level takes precedence over Supplier Site Level which takes precedence over Supplier level and so on.