The steps, one by one
- Capture. The invoice arrives by email, upload or portal and is recorded once, with vendor, number, date, amount and tax.
- Basic checks. Is the vendor active in your vendor master, is this invoice number new for this vendor, are the bank details the ones on file?
- Match. Compare the invoice with the purchase order and the goods receipt: quantity, price and total (the three-way match).
- Exceptions. Anything outside tolerance, or without a PO, goes to a person with the reason shown.
- Approval. The invoice goes to the approver your matrix names for its amount and category.
- Release for payment. Approved invoices are scheduled; the payment itself is a separate, controlled step.
Three-way match, in plain words
Two-way match checks the invoice against the purchase order. Three-way match adds the goods receipt: you only pay for what was ordered and actually arrived, at the agreed price.
Set a small tolerance so rounding and freight do not block everything, for example a price difference within 1% or a few hundred rupees. Inside the tolerance, the invoice can move on to approval. Outside it, someone has to look. A clean match should be the normal route; exceptions should be few and visible.
Who approves what
Route by amount and category, the same way you route purchase orders. A matched invoice under a small limit may need only the budget owner; larger ones add finance; very large ones add the CFO. The bands belong in your approval matrix, not in people’s heads.
Two rules hold whatever the amount: the person who raised the purchase should not be the only approver of its invoice, and a change to a vendor’s bank details always needs a second person and a call-back to a known number.
Where it usually breaks
- The same invoice paid twice because it arrived by email and by courier.
- Invoices approved by forwarding an email with "ok", with no record of whether the approver had the authority.
- No goods receipt recorded, so the match is done by memory.
- Exceptions handled in chat, so nobody can later explain why a higher price was accepted.
- Vendor bank details changed on the strength of a single email.
What to automate first
- One place where every invoice is captured, with a duplicate check on vendor plus invoice number.
- The three-way match and the tolerance check, calculated by the system rather than typed in.
- Routing of clean invoices to approval, and of exceptions to a named person with the reason.
- Approval by amount read from your matrix, with reminders when an invoice waits too long.
- A maker-checker step on vendor bank-detail changes.
- An audit trail of every check, exception, approval and change.
How this looks on Averoic
On Averoic, invoice verification with three-way matching is built and tested end to end: the match and the exceptions are calculated on the server, clean invoices move on, exceptions are held for review, and a duplicate check stops the same invoice reference being paid twice. Approvals by amount, reminders and the audit trail come from the same platform, configured without code. It runs on the same platform that handles lending approvals in production.
This guide is general information, not tax, legal or audit advice. Tolerances and approval limits must come from your own policies and delegation of authority.
Works with alternative lenders, AIFs, NBFCs and insurers in India on approvals, maker-checker controls and audit readiness.
See how your own process would run on Averoic — configured, not coded, with maker-checker controls and a complete, time-stamped audit trail built in.
Frequently asked questions
What is an invoice approval workflow?
The checks and approvals an invoice goes through before it is paid: capture, basic checks, matching against the purchase order and goods receipt, handling exceptions, approval by the right person for the amount, and release for payment.
How do you approve an invoice?
Check that the vendor is valid and the invoice is not a duplicate, match it against the purchase order and what was received, resolve any difference outside your tolerance, then have the person your approval matrix names for that amount approve it before it is scheduled for payment.
What is three-way matching?
Comparing the invoice with the purchase order and the goods receipt, so you pay only for what was ordered and actually received, at the agreed price. Two-way matching leaves out the goods receipt.
How can I improve the invoice approval process?
Capture every invoice in one place, let the system run the match and the duplicate check, send only exceptions to people, route approvals by amount from a written matrix, add reminders, and keep an audit trail. Most delay comes from chasing, not from the decision itself.
Who should approve invoices?
The person your delegation of authority names for that amount and category, usually the budget owner for smaller invoices with finance and senior approvers added as the amount grows. The person who raised the purchase should not be the only approver.
What tolerance should a three-way match allow?
Small enough to catch real price or quantity differences and large enough not to block rounding and freight, for example within 1% or a fixed small amount. The figure is a policy decision for your finance team.