Finance & Accounting

Procurement: PO → Receive → 3-Way Match → Pay

Raise and approve purchase orders, receive goods with GR-IR accrual, run the 3-way match that clears GR-IR and books price variance, and track supplier scorecards.

Updated July 9, 20268 min read1 labOwner / FounderAccountant

Procurement is the spend spine: PO → approve → receive → 3-way match → bill → pay → inventory. Each step posts the right entry and keeps the goods-received-not-invoiced (GR-IR) account honest, so you never pay for something you did not receive or receive something you never ordered.

Raising and approving a PO

Create a PO (vendor, dates, lines with item, quantity, and unit cost) - it starts as a draft. Or accept a reorder recommendation from demand planning, which drafts the PO for you. Approving the PO makes the commitment live; sending marks it sent.

Receiving and the 3-way match

From dock to ledger

1
Receive
Receive lines by quantity. This updates perpetual inventory and posts GR-IR: DR Inventory / CR Goods-Received-Not-Invoiced.
2
Match
Match the vendor bill to the PO by line (billed qty and unit cost vs PO). Tolerances are configurable, with an auto-approve-under threshold.
3
Post
The match clears GR-IR, books purchase-price variance if outside PO cost, and creates AP - balanced so grir_cleared + ppv == ap_credit.
4
Pay
Pay the bill to close AP (ideally through a guarded pay run).

Supplier scorecards

Scorecards derive per-vendor on-time percentage (expected vs received date), fill rate (received/ordered), lead time (order → receipt), and price variance from your PO, receipt, and match history - no separate data entry.

Hands-on labs

Practice against a realistic scenario. Each lab lists the steps, what you should see, and the checkpoints that confirm you got the same result.

Lab 1

Close the loop on a purchase order

Scenario

Acme orders raw material, receives it a few days early, and the vendor bills slightly above PO price. Walk the full loop and confirm GR-IR nets to zero.

Steps

1
Create and approve a PO for 100 units at $10.
Expected: Committed cost shows $1,000 for the vendor.
2
Receive all 100 units.
Expected: Inventory on-hand +100; GR-IR credited $1,000.
3
Match the vendor bill of 100 units at $10.40.
Expected: GR-IR clears $1,000, PPV books $40, AP credited $1,040.

Checkpoints - you got it right if…

GR-IR nets to zero after the match.
Purchase-price variance of $40 is booked.
The supplier scorecard reflects the early receipt and the price variance.

Frequently asked questions

What is GR-IR and why does it matter?

Goods-Received-Not-Invoiced. It accrues a liability the moment you receive goods, before the bill arrives, and clears on the 3-way match. It is the account that guarantees you cannot pay for un-received goods or lose track of received-but-unbilled ones.

How do reorder suggestions become POs?

Demand planning produces draft reorder recommendations. Accepting one bridges to a draft-first PO you review and approve - it never auto-cuts a PO without a human step.

Where do price variances go?

The 3-way match books purchase-price variance (PPV) when the billed unit cost differs from the PO cost, inside your configured tolerance. The posted entry always balances GR-IR-cleared + PPV against the AP credit.

Can small differences auto-approve?

Yes. Match tolerances (price % and quantity %) plus an auto-approve-under threshold let routine, in-tolerance matches clear without manual review, while out-of-tolerance ones route for approval.

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