Accounts payable invoice matching
Accounts payable invoice matching is the process of matching vendor invoice, purchase order, and product receipt information.
When you're matching documents, differences among these documents are called matching discrepancies. Dynamics 365 Finance compares matching discrepancies with the specified tolerances. If a matching discrepancy exceeds the tolerance percentage or amount, match variance icons display on the Vendor invoice page and on the Invoice history and matching details page.
For example, you enter a purchase order with one line item for 1,000 batteries at a price of 1.00 each. Your manager approves and submits the purchase order to the vendor. The vendor ships 1,000 batteries, and you enter a product receipt for 1,000 batteries at a price of 1.00 each. Then, Finance updates inventory cost for the batteries with this price.
An invoice arrives for 1,000 batteries at a price of 1.10 each. Your legal entity policy allows a 5% net unit price tolerance for this category of item. A price of 1.05 would be acceptable, but 1.10 isn't. When you enter the invoice information, Finance identifies a price matching discrepancy and you can save the invoice until you resolve the discrepancy.
You can use the following types of Accounts payable invoice matching:
Invoice totals matching - Match the total amounts on the invoice to the total amounts on the purchase order. This type of invoice matching includes the least amount of detail. Therefore, you can use this option to set up controls that minimize the required staff time for reviewing invoice matching information.
Two-way matching - Match the price information on the invoice to the price information on the purchase order.
Three-way matching - Match the price information on the invoice to the price information on the purchase order. Also, match the quantity information on the invoice to the quantity information on the selected product receipts for the invoice.
Charges matching - Match the charges information (amounts) on the invoice to the charges information (amounts) on the purchase order.
Accounts payable > Setup > Accounts payable parameters > Invoice validation tab
You can complete other types of invoice validation by using vendor invoice policies.
Two-way matching and three-way matching always match price information by the unit price. You can also configure these matching policies to match price information by the price total.
Net unit price matching - Match price information for two-way matching or three-way matching by comparing the net unit price for each line on the invoice with the corresponding net unit price on the purchase order. The following formula determines the net unit price:
Net amount of the line / Quantity of the linePrice totals matching - Match price information for two-way matching or three-way matching by comparing the net amount (price total) for each line on the invoice with the corresponding net amount on the purchase order. The following formula determines the net amount:
(Unit price * Line quantity) + Line charges - Line discounts
Typically, Finance automatically performs invoice matching calculations when you edit vendor invoices on the Vendor invoice page. Alternatively, you can have Finance perform invoice matching on demand, as needed. You can control invoice matching on demand for the legal entity by selecting the Automatically update invoice header status to option on the Accounts payable parameters page on the Invoice validation tab. Additionally, you can perform invoice matching as part of an invoice review process. You can view the results of invoice matching on the Vendor invoice page and related invoice matching pages.