How to automate supplier invoice matching

Automating supplier invoice matching means having a system read each invoice, compare it with the purchase order and with the goods receipt, and let the ones that match go through on their own. The team stops checking every invoice line by line and only looks at those with differences or those that may be duplicates.

In most manufacturing and distribution companies, invoice checking is still done by hand. Someone opens the PDF, looks up the order in the ERP, confirms the delivery note and only then posts the invoice. The work is repetitive, but it is not trivial. A price that differs from the agreed one, or a quantity that never reached the warehouse, slips through easily when volumes rise at month end.

What is three-way invoice matching?

Three-way matching compares three documents before an invoice is approved for payment.

1. The purchase order, which states what was ordered, at what price and in what quantity.
2. The goods receipt, usually the delivery note or the warehouse entry, which states what actually arrived.
3. The supplier invoice, which states what is going to be paid.

If the invoice price matches the order and the invoiced quantity matches the quantity received, the invoice is compliant. If not, someone has to decide whether to pay, request a credit note or contact the supplier. There is also two-way matching, between invoice and order only, which is used for services and for purchases with no physical receipt.

Why does manual invoice checking cost so much?

The time per invoice looks small, but it adds up. The same steps are repeated every time.

• Opening the email or the portal where the invoice arrived and saving the PDF.
• Copying the supplier, number, date, lines and totals into the ERP.
• Finding the matching order and receipt, often on another screen or in another system.
• Comparing prices and quantities, line by line.
• Making sure the same invoice has not already been posted.

The risk is not only the time spent. A duplicate invoice that arrives by email and then by post, or that two colleagues forward, can be paid twice. A small price difference, repeated across hundreds of lines a year, becomes an amount nobody authorised.

How does automated invoice matching work, step by step?

With EngiAIFlow, Engibots' intelligent process automation platform, the supplier invoice process follows these steps.

1. Collection. Invoices arrive at a dedicated mailbox. EngiAIFlow reads PDF attachments and, when enabled, scanned documents.
2. Reading. The invoice and the Portuguese Tax Authority QR code are read. The supplier and the date come from the QR code, and each line keeps the sentence of the document it was read from. Invoices, credit notes and debit notes are handled in the same process.
3. Matching. The platform performs three-way matching against the order and the receipt, looking them up in the ERP, and checks for duplicates before the invoice enters the ERP.
4. Decision. Compliant invoices go through. Those with differences, or that may be duplicates, reach a person together with what has already been done and the decision still needed.
5. Record. Each case's history records what was done at every step and every human decision, with the change and the reason.

Imagine, as an example, a company that ordered 100 units at 4.20 euros. The goods receipt recorded 100 units, but the invoice arrives with 120. The price matches and the quantity does not. The invoice does not enter the ERP on its own. It reaches the purchasing team with the order, the receipt and the invoice line side by side, and the person decides whether to request a credit note or wait for the 20 missing units.

What should AI do, and what should be left to rules?

This is the most important question when choosing a solution. Artificial intelligence is good at reading documents whose layout changes from one supplier to the next. It should not be the one deciding whether an invoice is correct.

In EngiAIFlow, calculations and invoice checking are done by the platform, without AI, and always give the same result. Every value AI extracts from a document comes with the sentence it was read from, and the platform confirms that sentence exists. Without the sentence, the value is routed to a person. That way, a misread figure does not slip unnoticed into the ERP.

Limits can also be set, such as “above this amount, ask for approval”, which suspend the case before the step until a person approves. And each correction made by the operator improves the next recognition for that supplier.

How are duplicate invoices and repeated postings avoided?

There are two kinds of repetition to avoid.

• The same invoice received twice. Duplicate detection runs before the invoice enters the ERP. A possible duplicate does not go through on its own and is sent to a person.
• The same posting made twice by the system. In EngiAIFlow, a write to a connected system is never repeated automatically. If the process is interrupted halfway, a person decides whether the write was already made.

Together, these two safeguards protect what worries the finance department most, which is paying what is not owed.

Where should you start?

Invoice matching is a good first process to automate, because the rules are clear and the result is easy to measure. Before starting, it helps to have the following in place.

• A mailbox used only for invoices, so that they all arrive in the same place.
• Orders and receipts recorded in the ERP, because without them there is nothing to compare against.
• The rules in writing, such as what to do about a price difference, who approves above which amount and who handles each supplier.
• A list of the highest-volume suppliers, to start with them and extend afterwards.

The team does not lose control. It spends its time on the invoices that need a decision, not on the ones that are correct. If your company also reconciles its bank statement by hand, the same reasoning applies, as shown in the automated bank reconciliation case. Other finance automations are described in the finance solutions.

Frequently asked questions

What is three-way matching?

It is the comparison of the supplier invoice with the purchase order and with the goods receipt. The price has to match the order and the quantity has to match what was received.

Does artificial intelligence decide whether the invoice is correct?

In EngiAIFlow, no. AI reads the invoice and the Portuguese Tax Authority QR code. Matching against the order and the receipt is done by the platform, without AI, and differences go to a person.

How do you avoid paying the same invoice twice?

Duplicate detection runs before the invoice enters the ERP, and a possible duplicate goes to a person. In addition, a write to a connected system is never repeated automatically.

What happens to an invoice with differences?

It does not enter the ERP on its own. It reaches the team with what has already been done and the decision still needed, for example requesting a credit note from the supplier.

Do we need to change ERP?

No. EngiAIFlow connects to the ERP the company already uses, looks up orders and receipts and writes to the source systems. Where there is no API, intelligent RPAs work directly on the systems' interfaces.