Three-Way Matching: Verify Vendor Bills Before They Reach Your Books

Video walkthrough

Three-Way Matching in Sutton: Verify Vendor Bills Before They Reach Your Books

This video shows how to turn on three-way matching, bill a purchase order in full or in parts, and resolve cost and quantity exceptions.

Before a vendor bill reaches your books, three things should agree: what you ordered, what actually arrived, and what the vendor is charging you. With three-way matching, Sutton compares the purchase order, received quantity, and vendor invoice line by line. Sutton flags any mismatch before sending the bill to your accounting platform, so your team catches errors before they reach it.

ℹ️ Note: This article uses QuickBooks Online as the example. Three-way matching works the same way with all of Sutton’s supported accounting platforms.

Turn on three-way matching

Three-way matching is off by default. To turn it on:

From the left sidebar, click Settings, then click Integrations.
On your accounting platform’s card (for example, QuickBooks Online), click Settings.
Scroll down to Enable 3-way matching and turn the toggle on.
Click Save. A Success confirmation appears.

Bill a purchase order

Once you've received the items on a purchase order, you can bill it against the vendor’s invoice.

Go to the Purchase orders table and find the Bill column.
Click the drop-down for the purchase order and select Bill by quantity. The Choose Items to Bill modal opens.
Review each line. You’ll see the Unit price, PO qty, Received qty, and Unbilled qty side by side
Enter the quantity and unit cost from your vendor’s invoice in the Invoice qty and Invoice cost columns. Both start empty.
Optionally, enter the vendor’s invoice number. See Add the vendor invoice number below.
Check the Match column. When the quantity and cost agree with the purchase order and what you received, it shows Verified.
Click Send to QuickBooks Online (or your accounting platform).

⚠️ Heads up: Invoice cost is the cost per unit, not the line total. If your vendor’s invoice shows a line total, divide it by the quantity before you enter it.

Add the vendor invoice number

The vendor invoice number is optional, but adding it makes each bill easier to trace. The number you enter becomes the bill number in your accounting platform, so your team can match the bill to the vendor’s invoice at a glance.

If you leave it blank, Sutton creates a bill number from the PO number and a bill sequence number. For example:

The first bill on PO133 becomes PO133-1.
The second bill on PO132 becomes PO132-2.

✅ Best practice: Enter the vendor’s invoice number whenever you have it. When a vendor calls about a payment or your team reconciles accounts, they can search for the number printed on the invoice instead of tracing it back through the purchase order.

Track the bill

After you send the bill, the Bill column on the Purchase Orders table changes to Bill pending, then to Billed once the bill reaches your accounting platform.

The match status reads Verified.

To open the bill in your accounting platform, click the Bill drop-down and select the bill link.

You can also find it under Billing in the PO details panel.

Match statuses at a glance

Status	What it means
None	No invoice quantity or cost has been entered for the line yet.
Verified	The invoice quantity and cost agree with the purchase order and what you received.
Exception	The invoice cost doesn’t match. The banner at the top of the modal explains why.

Cost exceptions

A cost exception happens when the vendor charges a different unit cost than the purchase order. As soon as you enter the cost, the line is marked Exception, and the banner at the top of the modal explains why.

If the price difference is expected, such as a confirmed price change or discount, you can still bill it:

Check Override exceptions.
Enter an Override reason. This is required. Send to QuickBooks Online stays disabled until you add one.
Click Send to QuickBooks Online.

The bill goes through, but its match status stays Exception, so overridden bills are always easy to spot.

In your accounting platform, the bill’s memo reads: This bill failed three-way matching. See app for details.

✅ Best practice: Make your override reason specific. Your accounting team will look for it first when they review the bill. A good reason says what changed, why, and who confirmed it. For example: “Vendor applied a 10% volume discount for orders over 500 units. Confirmed with vendor on 10/7.”

Review exceptions in Sutton

After you send a bill with an override, you can review the exception and the override reason you entered at any time from the purchase order.

Open the purchase order’s details panel and go to the Billing section.
Click the Exception drop-down next to the bill.
Review the Exception reason (what Sutton flagged) and the Override reason (the note entered when you sent the bill).

Quantity exceptions

Unlike cost exceptions, quantity exceptions can’t be overridden. If the Invoice qty exceeds the Unbilled qty, the line is marked Exception, the banner shows which item is over and by how much, and Send to QuickBooks Online stays disabled. You can approve a different price, but you can’t bill for goods you haven’t received. This protects you from paying for items that never arrived.

To continue, lower the Invoice qty to the Unbilled qty or less. You can bill the remaining units once you receive them.

💡 Pro Tip: If a line has both a quantity and a cost exception, fix the quantity first. The Override exceptions option appears once the quantity exception is resolved.

Partial Billing: bill a purchase order in parts

Vendors don’t always invoice everything at once. To bill only part of what you’ve received:

Open the Choose Items to Bill modal as usual.
In Invoice qty, enter only the quantity on the vendor’s current invoice.
Send the bill. The Bill column on the Purchase Orders table now shows Partially billed.
When the next invoice arrives, click the same Bill drop-down. You’ll find a link to every bill already sent.
Select Bill by quantity again. The Unbilled qty column shows exactly what’s left to bill.

Your vendor bills are now verified before they reach your books

With three-way matching on, every bill is checked against what you ordered and what you received before it reaches your accounting platform. Matching bills go through as Verified, expected price differences are documented with an override reason, and bills for goods you haven’t received are stopped before they’re sent. Your accounting team gets cleaner books and a clear record of every exception.

FAQ

Does three-way matching work with accounting platforms other than QuickBooks Online?

Yes. Three-way matching works the same way with all of Sutton’s supported accounting platforms. Turn it on from your platform’s card under Settings > Integrations.

Can I override a quantity exception?

No. You can only override cost exceptions. To clear a quantity exception, lower the Invoice qty to the Unbilled qty or less.

Is the vendor invoice number required?

No. If you leave it blank, Sutton creates one from the PO number and a bill sequence number, such as PO133-1

How do I find bills that were sent with an override?

Overridden bills keep the Exception match status. Open the Billing section of the PO details panel and click the Exception drop-down to see the exception reason and override reason.

If you have additional questions, please reach out to your Customer Success Manager or contact us at [email protected].