Three-way matching for a business with no purchase ledger clerk
Three-way matching compares a purchase order, a goods received note, and a supplier invoice before any payment is released. For physical goods it catches short deliveries and billing errors before money leaves your account. For services, the third document is a form that nobody can complete and catches nothing real.
Three-way matching compares a purchase order, a goods received note (GRN), and a supplier invoice before any payment is released. The purchase order sets what was agreed; the GRN records what physically arrived; the invoice states what the supplier is asking to be paid. When all three align on quantity and price, payment is approved. When they diverge, payment waits. The third document - the GRN - is where small businesses have to decide whether the effort is real or just paperwork. The answer depends entirely on what you are buying.
What the GRN actually catches
The GRN exists to answer one question the other two documents cannot: did the goods actually arrive? A purchase order and invoice can agree perfectly on quantities and price while your supplier's delivery arrived 20 units short of a 100-unit order. Without a delivery record, you will not discover the gap until you count stock - by which point the money has already gone.
That gap is expensive in practice. According to the AFP 2025 Payments Fraud and Control Survey, 76% of organizations reported attempted or actual payment fraud in 2025, with fraudulent invoices designed to pass a basic two-document check. Three-way matching closes that specific gap because a fraudulent invoice for goods that were never ordered or delivered cannot produce a matching GRN.
For businesses buying physical goods from suppliers - materials, stock, equipment, consumables - the GRN is the control that stands between your approved purchase order and your payment. Zigaflow's delivery notes feature functions as this receiving record: when goods arrive, the delivery note is confirmed against the purchase order, and the supplier invoice is matched against both. A short delivery gets caught at the GRN stage, not after money has left your account.
What a GRN records
A goods received note captures the quantity of items received, their condition, and the date of arrival. It is created by whoever accepts the delivery, not by the supplier. That separation of creation is what makes it a genuine control rather than another copy of the invoice.
When the third document adds nothing
The logic inverts when you are buying services. A consultant invoices for 10 days of work. You issued a purchase order for 10 days. The invoice arrives for 10 days. What would a GRN show?
Nothing that you could not already verify from the contract and the invoice. There is no delivery to inspect, no quantity to count at a loading bay, and no moment at which someone independently confirms what arrived. Any document you create to fill the third position in a three-way match is effectively a self-signed form that confirms what the invoice already says. It costs time to complete, it sits in someone's inbox, and it catches nothing.
This is why procurement practice separates the two cases. Two-way matching - comparing purchase order to invoice - is the appropriate control for services, subscriptions, recurring utilities, and professional fees. The three-way matching process adds value only when there is a physical deliverable that can be independently confirmed at the point of receipt.
Getting this distinction wrong in either direction creates real problems. Apply two-way matching to physical goods orders and you have no way to catch short deliveries or substitutions before payment leaves. Apply three-way matching to service invoices and you create a form that no one knows how to complete, that delays payment without catching anything real, and that your supplier will eventually call to ask about.
Blanket policies backfire
Applying three-way matching to all supplier invoices without distinguishing goods from services creates administrative overhead and delays payment on clean service invoices. The value of requiring a GRN comes entirely from having a genuine delivery event to record.
Running the check without a dedicated AP team
Large businesses have accounts payable teams, procurement departments, and goods-in staff who handle each stage separately. A small business typically has the same person raising the purchase order, accepting the delivery, and processing the invoice. That consolidation removes the separation-of-duties protection that three-way matching is partly designed to create - but it does not remove the operational benefit.
Even when one person handles all three steps, keeping the records separate still catches errors. A supplier who invoices for the full quantity on an order where only part of the delivery arrived will be caught if you recorded the partial receipt at the time, rather than relying on memory when the invoice lands three weeks later.
The practical approach for a small business buying physical goods:
Raise a purchase order before placing any order for physical goods. It does not need to be elaborate, but it needs to exist as a document with agreed quantities and prices. When goods arrive, record what was received at that moment - quantity, condition, and any shortfall. When the supplier invoice arrives, check it against both documents before approving payment.
For service spend - accountants, subcontractors, software subscriptions, consultants - apply the same discipline to the purchase order and invoice step, but skip the receipt document. That is not an oversight. It is the correct call.
The businesses that get this right build the distinction into how they categorize supplier spend before an invoice arrives. Physical goods orders go through three-way matching. Service invoices go through two-way matching. The paperwork matches the actual transaction, which means the control has a chance of catching something real.
Sources
- 3-Way Matching in Accounts Payable: How It Works and Why It MattersPrecoro · accessed 2026-09-20
- 2-Way vs 3-Way PO Matching in Accounts Payable: Differences, Benefits and Automation Guide 2026Mindsprint · accessed 2026-09-20
- What Is 3-Way Matching in Accounts Payable?Ramp · accessed 2026-09-20