3 way match or Three Way Match

3 way matching process in sap

The standard procedure for posting procurement transactions in Material Management (MM) is called the ‘three-step verification’, commonly referred as the’ three-way match’. The said procedure contains these three steps:
1. Purchase Order (PO) - In MM, a purchase order is created either with reference to PR or no reference (directly created). During PO creation and saving, there are no postings yet made to inventory or consumable material and to Financial Accounting. The PO form created is send to the supplier.

2. Goods Receipt – The Goods Receipt step is done upon receipt of the goods deliveries from the suppliers. During goods receipt transaction, the system generates material documents that update the inventory or consumable material. At the same time, a Financial Accounting document is created that posts the values of the goods receipt. The accounting entry that is created is debit (DR) to inventory or consumable material and credit (CR) to GR/IR clearing account.

3. Invoice Verification- The vendor’s invoice is posted in MM transaction using invoice verification (MIRO). This transaction automatically generates Financial Accounting document that post the accounting entry; Debit GR/IR clearing account and Credit Vendor’s Accounts Payable.