Three way matching in accounts payable is a well understood control, and the part that decides whether it helps or hinders is rarely the matching itself. It is the tolerances. A match is a comparison of supplier, quantity and price across the order, the receipt and the invoice, and real documents disagree slightly all the time: a rounding difference on a unit price, a part delivery, a carriage charge on the invoice that was not on the order. What you do about those small disagreements determines whether your team spends its month clearing exceptions or whether the control quietly stops operating. This page is about setting tolerances deliberately and reviewing them with numbers.
Why tolerances exist at all
Because exact agreement is rare and demanding it turns a control into a bottleneck. A tolerance says how much disagreement is acceptable without a person looking, expressed as an amount, a percentage, or both. Below it the invoice passes; above it a person decides.
Setting them, then measuring them
Start tighter than feels comfortable and count the exceptions for a month. If a category of small differences recurs and is always approved, that is a tolerance to widen. If exceptions are rare and each one finds something, the setting is right. Do this with the count in front of you rather than by feel.
What a badly set tolerance costs
Too tight and exceptions swamp the team: on the worked example on this site, exceptions at 12% already account for 14.4 of 134.4 hours a month. Too loose and differences pass unexamined, which is the failure nobody notices until an audit or a duplicate payment finds it.
Questions people ask about three way matching in accounts payable
Should tolerances differ by supplier?
Often yes. A supplier who invoices carriage separately or delivers in parts generates predictable differences, and a per-supplier tolerance is more honest than a global one that either fails for them or is too loose for everyone.
Who should set them?
Finance proposes and the person accountable for the spend agrees, because a tolerance is a decision about how much money passes unexamined.
How often should we review them?
Once you have a month of exception counts, and then when your supplier mix changes. A tolerance set once and never revisited drifts out of usefulness in both directions.