Where Three-Way Matching Breaks on Electrical Jobs, and What to Change
Key Highlights
- Log receipts in the field on delivery day to keep split-shipment invoices moving.
- Lock prices at the supplier, where billing can see them, not in an email.
- Use one master job record and require the job code on every PO.
- Write the PO revision into the change order before the invoice arrives.
- Adding the distributor's sales order to the match catches errors before payment, not at close.
Three-way matching breaks on electrical contracting jobs because it checks the contractor's purchase order and the contractor's receipt against the invoice. It never looks at the distributor's sales order which is the one document that already carries the price that may have changed and the shipment that got split. Electrical contractors already name payment delays and invoice approval processes as the most frequent problem on the receivables side of the business, and their own payables run the same way. The cross-industry exception rate is 18.4% at $9.84 per invoice all-in, and that is the floor for a business that receives shipments at a single dock.
The proper fix is a match that includes the distributor's record, run before payment. Interstates, an industrial electrical contractor, got there by connecting the systems first. Its SVP of Technology said: "We had seven different disparate systems where the job site name and address were entered differently in each system. Somebody might have shortened the name in system two compared to system one. The address might not have matched in one system to the other." An invoice can be right, a receipt can be right, and the match still fails on a string. Four places the match breaks, what each costs, one fix for each.
The four exceptions look alike in the queue yet start in different places on the job.
|
Exception |
Where it originates |
Who sees it first |
What it costs |
|
Split shipment |
The branch ships what it has; the balance follows |
The foreman signing a partial packing slip |
An invoice that waits, or gets paid against a receipt nobody entered |
|
Price drift |
The distributor's price changes between quote and release |
AP, weeks later, if anyone checks |
Tenths of a percent on every copper line, invisible per invoice |
|
Job with two names |
The same job keyed differently in the ERP, purchasing, and the supplier's system |
The purchaser reconstructing which job |
Job cost that lands late; an exception nobody owns |
|
Change order trailing the PO |
Quantities revised on site; the commitment revised later or never |
The PM, when the invoice is disputed |
A correct invoice sitting in exceptions for weeks |
Split shipments and job-site receiving break the match first
A split shipment reaches the job as two trucks, two packing slips, and an invoice for whatever was on each. The receipt is a photo of a slip signed on a tailgate, and it reaches the office when the foreman gets to it. The gap is between the tailgate and the ledger. When the first invoice arrives before the receipt is in, it waits in the queue or gets approved against a delivery nobody has entered, and the second invoice then fails against a PO that the system thinks is closed. The payment cycle stretches for reasons that have nothing to do with whether the material arrived.
Receive against the PO line in the field, on the day the truck lands, in the same system the order came from. Interstates moved roughly 230 job-site supervisors from filling out PDF forms to entering orders in-system and reported quick adoption from the field. The step that puts the order in is the step that puts the receipt in.
Price drift between the distributor quote and the invoice
Copper moves the distributor's price file, a quote converts to an order later, and the invoice reflects the file on the day the order releases. The branch did nothing wrong, and distributors say so themselves: a 30-day quote window protects against copper price volatility, and large projects get shorter windows.
Contractors buying $50 million of material a year cannot spot-check every invoice, and the invoices a spot check skips are where the drift lives. A tenth of a percent on a wire line never trips a reviewer's eye. On a $50 million material year it is $50,000 walking out the door, and nobody signs for it.
Lock the price at the supplier, and make the lock visible on the supplier's side at the moment the invoice is cut. A price agreed in an email is a price that the branch's billing system cannot see. Hold-for-release does this for materials the job will not need for months: lock the price now, release materials as the job calls for it, and both sides see the same commitment.
Job names and cost codes keyed differently in each system
Interstates' seven systems are this exception at scale, and belong to nobody. AP cannot resolve it, purchasing reconstructs which job the invoice belongs to from memory, and job costs land late on a project whose manager is watching margin week to week. The fix is one master record for jobs and cost codes that flows from the ERP into purchasing and out to the supplier, with the job code mandatory on the PO. A supplier who receives the job code with the order returns it on the invoice, and the string matches because nobody needed to type it twice.
Change orders that revise the quantity after the PO
Quantities change on site as the scope changes, and the commitment gets revised later or never. The invoice arrives correct against what was installed and wrong against the PO, and a correct invoice sits in the exception queue for weeks while someone reconstructs what changed and when. The distributor waits on payment for material that went in weeks ago. In ELECTRI's study of cash-flow practices, reviewing change-order status with the PM early enough to know whether an invoice will be cleared is rated among the most effective habits a contractor can build. Write the PO revision into the change order itself, so the commitment is current before the invoice exists.
AP automation for contractors: Matching against the confirmed sales order
Sage Intacct, Vista, and Spectrum all ship partial receipts, cumulative matching against received-to-date, and separate quantity and price tolerances, and the ERP does that arithmetic well. A tolerance is a decision about how much unexplained drift to pay without asking, and cumulative matching only knows what the field uploaded. Both run after the fact, on the contractor's copies. The distributor holds the same documents.
The appropriate fix is to move the match earlier and bring the distributor's record into it. When the contractor's purchase order and the distributor's sales order are the same record, the price file is visible at order time and the split shipment is known at the branch before the truck leaves. The job name is one string on both sides and the discrepancy gets caught while it is still a correction, weeks before it would surface as a variance at close. Contractors matching against a stale purchase order approve invoices that get disputed later, and the distributor's sales order had the price and the split on it from the day the order was placed.
Remarcable is the software where the contractor's order and the distributor's order are the same record, so it runs the match as a 4-way match: the PO, the supplier's sales order, proof of receipt, and the invoice. Every invoice gets checked automatically, and a price that drifted or a quantity that never arrived is flagged before payment. Customers report 1 to 3% savings on material cost from smarter buying and enforced pricing agreements. Interstates set the bar for the connection underneath it: "A lot of companies say they integrate. When they truly don't, they're importing and exporting CSVs with minimal data flow at best. True integration is making API calls and pushing that data back and forth between the systems, automated."
Three-way matching was built for a warehouse, and electrical contracting jobs will keep violating its assumptions for as long as material arrives in pieces and copper pricing moves. Start with the exception that costs the most at close, and put the distributor's record in the match.