A retail chain orders 500 TVs from a supplier at $400 each. When the invoice arrives, it shows 500 TVs at $450 each. Without checking, they might overpay $25,000. Later, they discover only 480 TVs were delivered. Now they’ve paid for 20 TVs they never received.

Definition

Purchase Order Matching is the process of comparing purchase orders with supplier invoices to verify that a company pays only for what it ordered at the agreed price. This verification step ensures billing accuracy and helps prevent payment errors or fraud.

How Purchase Order Matching Works

Purchase Order Matching follows these key steps to protect against billing errors:

1. Document Retrieval: Pulling up the original purchase order
2. Comparison: Checking the invoice against the purchase order
3. Validation: Confirming items, quantities, and prices match
4. Resolution: Addressing any discrepancies before payment

Organizations may handle this process manually or through automated systems, depending on their technology capabilities and invoice volume.

Types of Purchase Order Matching

Several matching approaches exist based on business needs and risk levels:

• Automated Matching: System-based comparison of digital documents
• Manual Matching: Staff physically checking paper documents
• Hybrid Matching: Combining automated tools with human review

Some companies also use blind matching, where receiving staff count items without seeing the PO quantity, providing an independent verification that reduces bias or assumption-based counting.

Where Purchase Order Matching Helps?

Purchase Order Matching adds value across many industries. Retail businesses confirm correct pricing on large product orders where even small percentage discrepancies can mean significant money. 

Manufacturing companies verify raw material deliveries match what was ordered in both quantity and specifications. Healthcare organizations check medical supply and equipment purchases against contracted prices. 

Construction firms validate building material quantities and costs to maintain project budgets. Hospitality businesses ensure food and supply orders are correctly billed according to negotiated vendor agreements.

Why It Matters?

It prevents overpayments and ensures that payments are only made for correct and authorized orders. This step is critical for reducing fraud and errors.

Best Ways to Use Purchase Order Matching

For optimal results with Purchase Order Matching, follow these proven practices:

• Make purchase orders mandatory for all orders above a certain value
• Train all involved staff on proper documentation procedures
• Set clear tolerance levels for price and quantity differences
• Review match exceptions promptly to avoid payment delays

Consistent application of these practices ensures the matching process adds value without creating bottlenecks.

Why Purchase Order Matching Matters

Purchase Order Matching helps companies avoid overpayment, detect fraudulent billing, and maintain accurate financial records. It creates accountability throughout the purchasing process from initial order to final payment. With effective matching processes, companies can better control spending, prevent duplicate payments, and build stronger supplier relationships through accurate, timely payments.

FAQ