What is 4-way matching in accounts payable?

When you're managing accounts payable, 4-way matching adds an extra layer of verification to help you prevent overpayments, catch invoice discrepancies, and ensure you actually received and approved what you're paying for. You might not need this level of control for every purchase, but it's essential when you're dealing with high-value, high-risk procurement.

What is 4-way matching?

4-way matching helps you verify four key documents in accounts payable before approving a payment. These documents include:

• The purchase order
• The goods received note (GRN)
• The inspection report
• The supplier invoice

Each document serves as a checkpoint to confirm you're paying for goods you actually ordered, received, and inspected. When you compare these four documents, you catch payment errors, prevent fraud, and maintain control over spending.

It also helps you build stronger supplier relationships by ensuring you pay the right amount on time.

How the 4-way matching process works

In 4-way matching, you'll use each document to validate a specific part of the transaction. They ensure the invoice reflects not just what was ordered and delivered—but also what passed inspection.

1. Purchase order (PO)

Your purchase order starts the transaction. It specifies what you agreed to purchase, including product details, quantity, unit cost, and delivery terms. This becomes the baseline you'll check the rest of the documents against.

2. Invoice

The vendor's invoice requests payment for the items or services provided. It should mirror the PO in quantity and pricing. If there's a mismatch—like billing for more units or a different price—you'll flag it for review.

3. Receiving report

When the shipment arrives, your receiving team logs what was actually delivered. The goods received note helps you verify that the correct items and quantities arrived as expected. Any discrepancies here may indicate a short shipment or delivery issue.

4. Inspection report

In the final step, you'll verify whether the delivered items meet quality or compliance standards. The inspection report—typically prepared by your quality control team—confirms that what you received is in acceptable condition and meets the specifications outlined in the PO or contract.

You'll only clear the invoice for approval and payment when all four documents align.

Who performs each step?

To make 4-way matching work, you need clear ownership of each verification step. Different departments play crucial roles in this process, ensuring proper segregation of duties and maintaining financial controls throughout the procurement cycle.

When you assign clear ownership to each document, you create accountability and ensure thorough verification at every stage. This approach strengthens your internal controls and speeds up the payment approval process.

Example of 4-way matching

Say your construction company places an order for 200 steel beams at $300 each, totaling $60,000. Here's how you'd apply 4-way matching before approving the invoice:

1. Your procurement team issues a purchase order with the agreed quantity, price, and delivery terms
2. When the beams arrive on-site, your receiving team confirms that all 200 were delivered as expected and logs a receiving report
3. Your quality team conducts an inspection to verify that the beams meet size, grade, and structural specifications and documents the results in an inspection report
4. The supplier sends an invoice for $60,000, which matches the PO, the delivery record, and the inspection results

Since all four documents align, you can approve the invoice and process payment.

2-way vs. 3-way vs. 4-way matching

You'll need to choose the right matching method based on your business needs, transaction size, and risk level. Here's how 2-way, 3-way, and 4-way matching compare:

If you use 2-way or 3-way matching for basic purchases, 4-way matching adds a quality safeguard. It's the most robust option but requires more resources, so you'll want to reserve it for purchases that justify the extra scrutiny.

When to use 4-way matching

You'll find 4-way matching most useful when you need to verify both delivery and quality before payment. This typically applies to manufacturing, construction, healthcare, and aerospace companies.

Manufacturing

Manufacturing environments often involve complex assembly processes. Component quality directly impacts final product performance. Raw materials or precision parts must pass technical inspection before you use them in production, as a single flawed component could compromise product integrity.

Implementing 4-way matching helps you maintain strict quality control throughout your supply chain, reducing costly production delays and potential warranty claims.

Construction

Your construction projects typically involve significant capital investment and safety considerations that demand thorough verification. Machinery, structural materials, or prefabricated parts must meet specific tolerances or contractual specs before you accept them.

By incorporating inspection reports into your payment process, you can document compliance with building codes and project specifications while protecting yourself from liability associated with substandard materials. You can also manage this easily with an integrated construction business credit card.

Healthcare and pharmaceuticals

Patient safety depends on the integrity of medical products, making thorough inspection absolutely essential. Regulatory compliance and safety standards require that medical devices, drugs, or clinical supplies meet strict quality criteria.

You can use 4-way matching to create audit trails that demonstrate regulatory compliance while ensuring that all products entering your facilities meet the exacting standards required for patient care.

Aerospace and defense

In highly regulated supply chains, performance and traceability standards are non-negotiable. These industries operate with zero tolerance for component failure, as lives often depend on product reliability.

The 4-way matching process helps you document comprehensive testing and verification procedures, satisfying both government oversight requirements and internal quality management systems.

Benefits and drawbacks of 4-way matching

4-way matching offers stronger payment controls but requires more time and resources than simpler matching methods. You'll need to weigh these tradeoffs when deciding whether it's right for your AP process.

Benefits of 4-way matching

• Improves payment accuracy: Ensures you only pay vendors when goods meet agreed-upon standards
• Reduces fraud and error: Adds an additional layer of review to catch invoice discrepancies, delivery mismatches, or unauthorized changes
• Supports compliance: Helps you meet industry or internal requirements for quality, safety, or financial control
• Strengthens vendor accountability: Holds vendors accountable—they're less likely to submit incomplete or inaccurate deliveries when they know you'll inspect everything

Drawbacks of 4-way matching

• More time-consuming: Reviewing four documents instead of two or three adds extra steps to your AP process, especially if you're doing it manually
• Resource-intensive: Requires coordination between your purchasing, receiving, quality control, and AP teams—each needs to complete their part before payment can proceed
• Not necessary for all purchases: Adds unnecessary overhead for routine, low-risk transactions like office supplies or recurring services where 2-way or 3-way matching works fine

Reserve 4-way matching for high-value or critical purchases where quality verification justifies the extra time and resources in your approval workflow.

How automation simplifies 4-way matching

Manual 4-way matching creates bottlenecks when you need to cross-check data across different systems or chase down missing documentation from other departments. The process is slow, error-prone, and easy to bypass without proper controls.

AP automation platforms transform 4-way matching into a practical, scalable process:

• Extract and standardize data automatically: OCR and AI-powered data capture pull key fields from your invoices, POs, delivery receipts, and inspection reports, eliminating manual data entry
• Match documents instantly: The system compares quantities, pricing, and quality fields across all four documents and flags any mismatches in real time
• Automate exception routing: The platform sends flagged invoices to the appropriate reviewers based on rules you define, so you don't have to chase approvals manually
• Track status from intake to resolution: Every step is logged and visible, making audits easier and helping you close the books faster
• Reduce human error and oversight gaps: Automation enforces your matching policy consistently, ensuring no steps are skipped—even when volumes increase

With the right technology, you can implement 4-way matching without slowing down your AP process. You'll catch discrepancies before payment while keeping invoices moving through approval.

Bring structure to invoice matching with Ramp

Manual invoice matching leads to payment delays, duplicate charges, and hours spent tracking down discrepancies. You're stuck comparing invoices to purchase orders by hand, hoping nothing slips through before you approve payment.

Ramp automates invoice matching across your AP process, catching discrepancies before they cause overpayments or delays.

With Ramp Bill Pay, you can:

• Extract invoice data with AI-powered OCR
• Match invoices to purchase orders easily
• Automate approval workflows and route exceptions to the right people
• Sync with your ERP for seamless reconciliation

From basic invoice validation to advanced approval workflows, Ramp gives you complete control over your AP process. Explore Ramp's invoice management software to see how it works.