What is a 4-way match in accounts payable

1. What is a 4-way match in accounts payable? Four-way matching of accounts payable is the process by which a business ensures that the goods or services received match purchase orders, delivery notes, and invoices. This process is an important part of financial management because it helps ensure accuracy, accountability, and financial compliance. This process consists of four elements: purchase order, delivery note, invoice, and goods or services received. By comparing four documents, you can quickly identify inconsistencies and potential fraudulent activity. Four-way matching also helps reduce administrative costs associated with transaction processing. This allows you to immediately identify and resolve any discrepancies, helping you pay your suppliers accurately and in a timely manner. Four-way matching is therefore an essential part of any business' accounts payable process, protecting against errors, fraud, and unnecessary administrative costs. Step-by-step process of 4-way matching Effective four-way matching of Accounts Payable processing in Washington involves a structured series of steps that ensure accuracy, compliance, and smooth financial transactions. This process may seem simple at first glance, but it involves several important steps. 1. Initiate purchase order AP's four-way matching process begins with creating a purchase order (PO) when a department within an organisation needs goods or services. The PO describes the details of the transaction, including item description, quantity, price, delivery date, and any special terms and conditions. It serves as a legally binding document and serves as the basis for the subsequent four-party matching process. 2. Receive goods and generate receipt report Once delivery of goods or services is complete, the receiving department or designated representative is responsible for receiving the goods and evaluating them for accuracy and quality. At this stage, a Goods Receipt Report (also known as Goods Receipt or Delivery Note) is generated to formally document actual receipt. This

2. report lists key information including quantity received, condition of goods, and deviations from agreed specifications. Its main role is to provide clear evidence that the goods or services were actually received in accordance with the specifications set forth in the purchase order. 3. Receive invoice from supplier The supplier then issues an invoice requesting payment for the delivered goods or services. The invoice includes item details, quantity, unit price, applicable taxes and payment terms. It is important to ensure that your invoice matches your purchase order to avoid discrepancies and ensure smooth processing. 4. Inspection or quality report An inspection or quality report is also typically part of the payment process for a four-way matching account. This report evaluates the quality, specifications or compliance of the goods or services received with established standards. Ensuring that products meet required quality standards is important, especially for industries where product or service quality has a direct impact on operations, safety, or customer satisfaction. 5. All four parts match The key to the four-way matching process is comparing all four components: purchase order, receipt report, invoice, and, if applicable, inspection or quality report. These documents are cross-referenced to ensure they match in terms of item description, quantity, price and delivery date. A successful match indicates that the goods or services were correctly ordered, received, and billed. 6. Resolve differences Inevitably, discrepancies may arise during the matching process. These discrepancies may include incorrect quantities, pricing errors, damaged merchandise, or quality issues. If any inconsistencies are identified, they must be resolved before proceeding. Communication with vendors or internal departments may be necessary to clarify and correct issues.

3. 7. Acceptance and Payment Once all discrepancies have been resolved, approval of the certified invoice can proceed. Representatives, primarily in the Accounts Payable department, review matching documents and approve invoices for payment. This step ensures that payments are made only for legitimate and correct transactions. 8. Record keeping and documentation Comprehensive record keeping is essential for compliance, auditing and financial transparency. All documents related to the four-way matching process, including purchase orders, receipt reports, invoices, inspections or quality reports, are accurately documented and stored. This document serves as an audit trail, makes transaction details easily retrievable, and supports Financial Reporting & Compliance in Washington . Example of 4-Way Match for Accounts Payable Below is an example of a four-way matching of accounts payable. Assume an automobile manufacturing company purchases 100,000 automobile wheels from a supplier. ● A company sends its supplier an order for 100,000 car wheels. A purchase order is created specifying product quantity and price. ● The seller sends 100,000 car wheels with a receipt report. The goods supply quantity matches the receipt report, and the goods are delivered after the amount matches. ● The car company then inspects the wheels and discovers that 5,000 of the wheels supplied by the seller were defective. This was reported on the inspection slip and to the supplier who was unable to provide a replacement in a timely manner. ● The seller invoices the company for a total of 100,000 cycles. The AP specialist who processes the invoice matches it with the purchase order, receives reports and inspection slips, and records any discrepancies between the invoice and inspection slip. ● The expert holds up the invoice and raises the issue with the seller. Seller sends a processed revised invoice after 4-party matching. Conclusion:

4. Four-way matching of accounts payable includes Matching purchase orders to invoices in Delaware , receiving reports, and inspection slips. The purchase order contains details of the goods required by the supplier. A report received from the supplier will accompany the goods stating the quantity of goods delivered. After thorough inspection, an inspection slip is issued to ensure that the delivered product matches the desired quality. 4-Party Matching rigorously checks for overpayments and invoice fraud to ensure you don't lose your money. It also prevents manual errors that may occur accidentally. Implementing AP automation software can speed up the manual four-party matching process and ensure bills are paid on time.