Match Approval Level and Invoice Match Option Summary

What is the difference between Match Approval Level and Invoice Match Option??

From Oracle User GuideSelect one of the following options for Match Approval Level:

• Two-Way: Purchase order and invoice quantities must match within tolerancebefore the corresponding invoice can be paid.

• Three-Way: Purchase order, receipt, and invoice quantities must match withintolerance before the corresponding invoice can be paid

.• Four-Way: Purchase order, receipt, accepted, and invoice quantities must matchwithin tolerance before the corresponding invoice can be paid.If you enter an item, a value for this field is defaulted. See: Purchase OrderDefaulting Rules, page 4-10.Select an Invoice Match Option:

• Purchase Order: Payables must match the invoice to the purchase order.

• Receipt: Payables must match the invoice to the receipt.Choose Receipt if you want to update exchange rate information on the receiptor if you want your accounting to use exchange rate information based on thereceipt date. (If you use Periodic Costing, you must match to the receipt toensure accurate cost accounting.)The Invoice Match Option defaults from the Supplier Sites window. You canchange the Invoice Match Option on the shipment until you receive against theshipment.

Note: The Invoice Match Option and the Match Approval Level areindependent options. You can perform whichever Invoice MatchOption you want regardless of the Match Approval Level.

1. What is 2-way, 3-way, 4-way matching? Can you give me an example of 2 way matching? 
2-way matching: 2-way matching verifies that Purchase order and invoice quantities must match within your tolerances as follows:
Quantity billed <= Quantity Ordered Invoice price <= Purchase order price (<= sign is used because of tolerances) Often used for services where no receiver is generated.
3-way matching: 3-way matching verifies that the receipt and invoice information match with the quantity tolerances defined: Quantity billed <= Quantity received
4-way matching:
4-way matching verifies that acceptance documents and invoice information match within the quantity tolerances defined: Quantity billed <= Quantity accepted. (Acceptance is done at the time of Inspecting goods).


A: Accrue On Receipt means that when a receipt is saved, accrual transactions are immediately recorded and sent to the general ledger interface. This is also known as "online" accruals. Accrue at Period End means that when a receipt is saved, the accrual transactions are not immediately recorded and sent to the general ledger; instead, the accounting entries are generated and sent at the end of the month by running the Receipt Accruals - Period-End Process.
All items with a destination type of either Inventory and Outside Processing are accrued on receipt. For items with a destination type of Expense, you have the option of accruing on receipt or at period end.

What is the difference between 'Accrue On Receipt' and 'Accrue at Period End'

What is 'Matching Level' in Purchasing?

When you are configuring Oracle Purchasing, there is a configuration called 'Invoice Matching'. What is it?

Matching Level determines the various documents that you check and match before you make the payment to the supplier. Just to refresh your 'Procure To Pay (P2P)' flow, the steps involved in the P2P flow are shown in the diagram below. 

As you can see above, the last step before making payment is to match the documents. In this step, the finance manager verifies various documents and ensures that everything is ok before making the payment to the supplier.

The process of checking the documents is called 'Matching'.

So what are the documents to be matched?

1. Purchase Order

2. Receipt

3. Inspection Certificate

4. Supplier Invoice.

The various matching options are: 

1. 2-Way Matching: In this matching option, the payables accountant matches that the Item, Quantity, Terms and Price match between Purchase Order and the Supplier Invoice. Since the accountant is not checking if material is received, this kind of matching option applies in the following situations.

1. There is a lot of trust between the Company and the Supplier

2. The value of the items received is very low

3. The order is a Service order and Items are not available for these PO.

2. 3-Way Matching: In this matching option the following documents are matched. PO, Receipt and Invoice

3. 4-Way Matching: In this matching option all the four documents vis. PO, GRN, Inspection Certificate and Invoice are matched.

Many organizations get into the mistake of using 4 way matching where they need only 3-Way matching. 'We inspect the materials before we receive the items into inventory', they say. The issue in configuring matching option in ERP is not if you do a physical inspection (Everyone does a physical before receiving the material into inventory) but whether the payables accountant has to match Inspection Certificate before he makes payments to the supplier. Looking from that perspective, most of the organizations do not use 4-Way matching, but they have configured the same in ERP.

What is the issue of configuring 4-Way Matching? 

If you use 4-Way matching, you have to have an additional step of 'Inspection' to be completed in the system before you complete the receipt process. This additional step can add up to a lot of wasted effort in the Organization.

Normally Matching Option goes along with another option in Oracle known as 'Routing Method'. They go hand in hand. More about 'Routing Method' later.