Purchases

Three-Way Match

Verify that what was ordered, received, and billed all agree before paying a vendor.

Three-way matching is the control that prevents overpaying, paying for goods never received, and accepting invoices that do not match what was agreed. Before approving a vendor payment, you verify three documents against each other. If all three agree, the payment is approved. If they differ, you investigate.

The three documents are the Purchase Order (what you agreed to buy), the Goods Received Note (what actually arrived), and the Bill (what the vendor is charging you). Trabalance links them — the PO's Lifecycle panel lists every GRN and bill created from it, and the PO's status is computed from their quantities. The comparison is yours to make.

The PO's Lifecycle panel puts the GRN and the bill side by side with the order, and states the variances it finds.

💡Trabalance makes the comparison for you

You do not have to line the three documents up by eye. The Lifecycle panel compares them automatically and writes what it finds in plain language — rate variances against the order, quantity differences against the delivery, and whether the payment landed before or after the due date. See Tracking a bill — the Lifecycle panel.

What Is Matched

Document	Records	Verified Against
Purchase Order (PO)	What was ordered — item, quantity, agreed price, vendor	The original agreement. Nothing should differ from this without an approved change.
Goods Received Note (GRN)	What was physically received — item and quantity (the rate carries from the PO)	The PO quantities. Fewer than ordered is a partial delivery; more is a discrepancy.
Bill	What the vendor is charging — item, quantity, unit price, tax	Both the PO (agreed price) and the GRN (received quantity). The bill quantity should match the GRN. The bill price should match the PO.

The Match Rule

Scenario	What to Do
PO qty = GRN qty = Bill qty AND PO price = Bill price	All three match. Save the bill and pay.
Bill qty > GRN qty	Vendor is billing for more than was received. Keep the bill as a draft. Raise a query with the vendor and wait for a corrected invoice or a credit.
Bill price > PO price	Vendor is billing at a higher rate than agreed. Keep the bill as a draft. Reference the PO in your dispute.
GRN qty < PO qty (partial delivery)	Normal for staged deliveries. Bill and pay only what has been received. The PO stays Partly fulfilled for the balance.
Bill arrives with no PO	Investigate: was this purchase authorized? Depending on policy, raise the PO retrospectively before saving the bill.
GRN not yet created but bill has arrived	Either create the GRN first and convert it, or record the bill directly — a direct bill for stock items puts the goods into stock itself.

How Matching Works in Practice

PO is saved and sent to the vendor

PO for 200 units of Product A at 50 each = 10,000. Status Open.

Goods arrive — GRN is created

Warehouse converts the PO to a GRN and records 200 received. Stock on hand +200. No journal. PO status: Fulfilled; GRN status: Open.

Vendor invoice arrives — Bill is created

Vendor invoices 200 units at 50 = 10,000. Open the GRN → More → Convert to → Bill. The bill pre-fills with the GRN quantities and rates.

Three-way check

PO: 200 at 50. GRN: 200 received. Bill: 200 at 50. All three agree. Save the bill: DR Inventory asset 10,000, CR Accounts Payable 10,000. GRN status: Matched.

Payment

Record Payment on the bill. 10,000 paid to vendor. DR Accounts Payable 10,000, CR Bank 10,000.

Discrepancy Example

Scenario: PO for 200 units at 50 each. GRN received 180 units. Vendor bills for 200 units at 55 each.

Two discrepancies:

Quantity: bill says 200, GRN says 180. You should only pay for 180.
Price: bill says 55, PO says 50. Vendor has billed at a higher rate than agreed.

Action:

Convert the GRN to a bill but Save as Draft — a draft posts nothing.
Contact the vendor. Request a corrected invoice: 180 units at 50 = 9,000.
When the corrected invoice arrives, update the draft to 9,000 and Save.
Attach the original invoice and correspondence to the bill for audit purposes.

🚨CRITICAL

Three-way matching is a control, not a formality. Skipping it — saving bills without checking them against the PO and GRN — is a fraud vector. Vendors may overbill deliberately or accidentally. Without matching, overpayments accumulate silently. The PO is your agreed contract. The GRN is your receipt. The bill must match both.

When Three-Way Match Is Not Required

Two-way matching (Bill vs PO, no GRN) is acceptable for service purchases where no physical receipt is possible: consulting, software subscriptions, professional services, rent. You are verifying price and scope against the agreement, not a physical delivery.

One-way match (Bill only) is acceptable for pre-agreed recurring costs where a PO would add no value — utilities, standard subscriptions with fixed pricing, regular payroll processing fees.

Purchase Type	Match Required
Inventory, raw materials, physical goods	Three-way: PO + GRN + Bill
Capital equipment, large asset purchases	Three-way: PO + GRN + Bill
Consulting, legal, professional services	Two-way: PO + Bill (no GRN possible)
Software, subscriptions, recurring fees	Two-way or one-way — depends on policy
Utilities, rent, fixed regular costs	One-way: Bill only (price known in advance)

The panel that performs the comparison: Tracking a bill — the Lifecycle panel.
Document one: Creating a purchase order.
Document two: Goods received notes.
Document three: Billing a goods received note.
Resolving a variance in your favour: Debit notes.