When invoice verification is done in SAP, there are 2 concepts involved. One is known as 3 way match and another is known as 2 way match. Let us discuss these 2 concepts in detail and how integration with SAP FI-CO takes place.
When an invoice is presented to the finance department, the finance people verify it by seeing price and quantity values of the materials in PO and GR. If the price and quantity values of material mentioned in the PO matches with those on GR then they check if these values match on the invoice as well. If the values match then the finance people will post the invoice and the system will credit account of the vendor. If the price and quantity values do not match at any of the 3 documents then invoice is sent back to the vendor and/or the inventory department for clarification. Only after confirmation and matching, the finance people will post the invoice document in the SAP system. This type of invoice verification is known as 3 way match.
The 3 way match is used for goods which are not consumed directly and go to inventory. They are consumed from the stock available in the inventory. But some materials are not bought to be sent to inventory. They are used immediately after they are bought. Some examples of consumable materials include spare parts of machines, office supplies, purchase for material used for a project etc. How invoice verification is done for these materials in SAP?
In SAP, directly consumed materials have a material type “non-stock” materials. When these materials are purchased, there are no goods receipts generated in SAP. So when a invoice is sent by the vendor for these materials then the finance department do not have a goods receipt against which they can verify material quantity and price comparing with the PO. In such cases, they only check the material quantity and price mentioned on the PO and compare it with what is mentioned on the invoice. After verification, they post the invoice in SAP system and the vendor account gets credited.