WORKFLOW

Purchase order to invoice matching

Validate vendor invoices against corresponding purchase orders (POs) recorded in the ERP or inventory management system.

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Purpose

To validate vendor invoices against corresponding purchase orders (POs) recorded in the ERP or inventory management system. This ensures you only pay for items that were ordered, received, and billed accurately. The workflow can perform automated matching at a large scale, across hundreds of PO lines.

Data sources

  1. ERP or inventory management system: Structured purchase orders pulled from the ERP or other systems.
  2. Vendor invoices received via email: Invoices received from vendors via email, containing billed line items, quantities, unit prices, totals, tax amounts, and invoice metadata.
  3. Unmatched items from the previous period.

Key processing steps

1. Pull open purchase orders

  • Retrieves all open POs via the ERP PO API.
  • Includes relevant PO details: line items, item codes, unit cost, ordered quantity, receiving data (if used for 3-way match), and PO status.
  • Validates that PO data is complete and available for matching.

2. Invoice data extraction and normalization

  • Parses incoming vendor invoices from email attachments (e.g. PDF, structured formats, or OCR output?).
  • Standardizes extracted invoice data into a consistent structured format.

3. Two-way or three-way matching

  • Matches data depending on your business rules:
    • Two-way match: Compares invoice data to PO data on item, quantity, and amount.
    • Three-way match: Also includes receiving records (proof of goods receipt or service confirmation).
  • Matching logic includes:
    • Line-level item code match
    • Quantity accuracy
    • Unit price and total amount compliance
    • Tax/fees alignment with contract or PO rules
    • Detection of over-billing, duplicate invoices, or mismatched items
  • Flags any parsing or extraction failures for manual review.

4. Automated approval for matched invoices

  • Automatically approves invoices that pass the matching rules without discrepancies.
  • Records approval status, match results, and invoice metadata for audit purposes.
  • Pushes approved invoices into the payables or ERP workflow for payment processing.

Outputs

  • Matched results - Successfully matched POs and invoice lines.
  • Approved invoices - Automatically validated and released to accounts payable.
  • Exception report - List of invoices or PO lines requiring manual intervention.

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