how to implement 2-way matching and 3-way matching in APO in ServiceNow.

rishikesh_khade
Giga Contributor

‎03-04-2026 11:18 PM

i want to know like how do we configure 2 way matching and 3 way matching in APO product and implement it in the product. also how do we configure the tolerance for the same 

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SinghShailendra
Kilo Guru

2 weeks ago

 
 2-Way Matching
Compares:
  • Purchase Order (PO)
  • Invoice
 Used when:
  • No goods receipt is required
  • Services/materials are not tracked physically
 Validation:
  • Price
  • Quantity
  • Line items
 3-Way Matching
Compares:
  • Purchase Order (PO)
  • Goods Receipt (GRN / Receipt)
  • Invoice
 Used when:
  • Physical goods are received
  • Inventory tracking matters
 Validation:
  • PO vs Receipt → quantity delivered
  • Receipt vs Invoice → billing accuracy
 
ServiceNow does not explicitly label features as "2-way/3-way matching switches" but achieves this via:
  • Matching rules
  • Receipt requirements
  • Invoice validation configuration
Configuration Steps in ServiceNow
 Step 1: Enable Matching Type at PO Level
Key fields:
  • Require receipt (true/false)
Setting Behavior
Receipt NOT required 2-Way Matching
Receipt required 3-Way Matching
 Step 2: Configure Matching Rules
Navigate:
Accounts Payable → Administration → Matching Rules
Define rules such as:
  • Match by:
    • Quantity
    • Unit price
    • Total amount
  • Matching levels:
    • Header level
    • Line level (recommended)
 Step 3: Configure Invoice Matching Policy
Navigate:
Account Payable → Properties / System Properties
Look for properties like:
  • glide.procurement.invoice.matching.rule
  • sn_ap.invoice.matching.enabled
 
Example:
  • Strict → Exact PO & Invoice match required
  • Loose → Allows tolerance (configured later)
 Step 4: Configure Receipt Integration (for 3-Way)
Navigate:
Procurement → Receipts
Ensure:
  • Receipt creation is mandatory before invoice
  • Link between:
    • PO line → Receipt → Invoice line
 4. Tolerance Configuration in ServiceNow
Tolerance defines how much variance is acceptable.
 Step 1: Navigate to Tolerance Rules
Accounts Payable → Administration → Tolerance Rules
 Step 2: Define Tolerance Types
 Common Types:
Type Example
Quantity tolerance±5%
Price tolerance±2%
Amount tolerance±₹500
 Step 3: Configure Rule Fields
Typical fields:
  • Tolerance type
    • Quantity / Amount / Price
  • Tolerance value
    • % or absolute amount
  • Applies to
    • Supplier
    • Category
    • PO type
  • Match type
    • 2-way or 3-way context
  Auto-approve OR  Exception
 3-Way Matching Flow
  1. Create PO
  2. Receive goods (create receipt)
  3. Create invoice
  4. System compares:
    • PO vs Receipt vs Invoice
  5. Apply tolerance
  6.  Match → Invoice approved
     Mismatch → Exception queue
 6. Exception Handling
Invoices that fail matching go to:
Accounts Payable → Exceptions / Invoice Exceptions
Actions:
  • Manual approval
  • Reject invoice
  • Adjust PO/Receipt
7. Best Practices
 Use 3-way matching for:
  • High-value goods
  • Inventory tracked items
 Use 2-way matching for:
  • Services
  • Recurring invoices
 Configure tolerance carefully:
  • Too strict → many exceptions
  • Too loose → risk of overpayment
 Always keep:
  • Line-level matching enabled
  • Supplier-specific tolerance rules (if needed)

    Please mark it help helpful if it helps