2 way matching in accounts payable compares the supplier invoice against the purchase order and stops there. There is no goods receipt in the comparison, either because none exists or because it would tell you nothing useful. It is often described as the weaker sibling of three way matching, which is true as a statement about coverage and misleading as advice, because a great deal of business spend has no deliverable to receipt. Software licences, professional fees, rent, subscriptions and retainers all arrive as invoices against an agreed commitment with nothing to check into a warehouse. This page is about when two way matching is the right control rather than a compromise, and what you need alongside it.
What it confirms
That the price and terms on the invoice are the ones that were agreed when the commitment was made, and that somebody with authority made that commitment. For spend with no physical delivery, that is most of what is available to check.
What it leaves uncovered
Whether the thing was actually delivered or performed. For services that gap is real, and it is closed by the person who commissioned the work confirming they received it. That confirmation is the substitute for a goods receipt and should be recorded as deliberately as one.
Where it is the right choice
Recurring commitments with a contract behind them, professional services with a fixed fee, and anything where insisting on a receipt would create a paper record nobody reads. Choosing it deliberately is better than running three way matching that fails for a third of your spend.
Questions people ask about 2 way matching in accounts payable
Is two way matching acceptable to auditors?
It is a common control and its adequacy depends on what it is applied to. What an auditor will look for is that you chose it for a reason and applied it consistently, and that services have some evidence of receipt.
Can we mix two way and three way matching?
Most businesses do, by spend category. The important part is that the rule is written down, so an invoice's route is not decided by whoever happens to open it.
What about invoices with no order at all?
They need approval by the person who commissioned the spend, and they are worth counting: a large no-order population usually means purchasing controls, not payables controls, are the thing to fix.