How to get purchase order-to-invoice reconciliation right

by | Sep 9, 2019

Considering the pace at which the retail industry is changing it’s becoming harder for retailers to keep up with the demands that consumers are placing on them, as well as the suppliers, vendors and other trading partners who support them.

With every link in the supply chain accelerating, the odds of having incorrect documentation due to manual data entry errors and other human errors only compounds this challenging landscape.

Automation: the gift that gives back valuable time and resources

Reconciling business documentation for transactions takes time and resources to do consistently well. However, the reality is, if any part of the transaction chain is incorrect, a retailer can unintentionally miss out on valuable discounts or, worse, end up paying for merchandise that they never received.

Automation of the PO to invoice reconciliation process, or the three-way match process, between purchase orders, invoices and receiving documentation, can ensure retailers are only paying for what they get and can help your supply chain become more nimble.

How a purchase order-to-invoice three-way match works for retailers

PO-to-invoice three-way matching is an essential transaction reconciliation process retailers can use for approving payment to a supplier, vendor, or wholesaler upon completion of an order.

A three-way match allows you to spot inconsistencies in three critical documents in the purchasing process by 1.) matching the buyer’s purchase order to 2.) the seller’s invoice, and 3.) matching the inventory receiving sheets or advanced shipping notice delivered to the buyer’s warehouse. Other documents that might be matched include purchase order acknowledgment and purchase order change request.

Comparing these documents can prevent many potential issues (including paying for incorrect or fraudulent invoices), as well as to authenticate valid invoices for direct payment.

Purchase order-to-invoice reconciliation automation with EDI

 Automation of the purchase order-to-invoice reconciliation using electronic data interchange (EDI) means that the bulk of these previously referenced issues can be reduced or eliminated. Plus, EDI systems for retail easily integrate with ERP, accounting software, and other solutions, enabling the elimination of manual entry and the exchange of transaction information digitally.

An EDI-enabled 3-way match process shortens your transaction reconciliation and payment processes by automatically approving all matching documents for payment while separating any that don’t qualify for closer review.

Add more value to your bottom line

For both retailers and suppliers, finding ways wherever you can to add to your bottom line is a shared desire. Getting there is easier by automating your purchase order and invoice reconciliation and adopting the three-way match procedure.

Wrapping an EDI solution to help you in automating these activities can help positively impact your bottom line without making drastic changes to how you do business today.

To learn more about using automated PO-to-invoice reconciliation and purchase order-to-invoice reconciliation in your EDI system (or to learn how to use EDI with your retail trading partners) visit the SPS Commerce website. You can also get a free demonstration, or speak to one of our EDI specialists.

Evaluating Your EDI options: 7 Building Blocks of Full-Service EDI

Get insights on choosing the right EDI solution for your business and the seven components vital for truly full-service EDI.

 

SPS Australia Blog Team

The Australian SPS blog team combines the experience and insights from dozens of colleagues to deliver news, how-to guides, reports, and more.
SPS Australia Blog Team