Understanding 4-Way Matching in Accounts Payable: Crucial for Cannabis Operators

Accounts Payable, Kind of Important

Back in the day, I worked in the traditional financial services industry. One of the many things that I loathe learning in these roles is accounting. I despised studying financial planning and analysis, and that’s probably why I still live at home with my mom because I can’t manage my finances worth a dime. Just kidding, I live on the ocean parents-free, but that’s irrelevant to this blog, yet you get the point.

What’s important to know is that for cannabis operators, managing financial transactions accurately is crucial to maintaining compliance, avoiding penalties, and managing costs effectively. Flourish Software offers an advanced 4-way matching process in Accounts Payable to help ensure that every payment aligns with the agreed-upon terms and goods received. 

What is the 4-Way Matching Process in Accounts Payable?

4-way matching is the most detailed form of matching in Accounts Payable, involving comparing four key documents:

1. Purchase Order (PO): Specifies the items, quantities, and agreed prices for products or services purchased.
2. Goods Note Received/Order Receipt (GRN): Confirms the received goods and notes any discrepancies or damages.
3. Supplier's Invoice: Requests payment for the delivered goods or services, including invoice number, description, tax details, and terms.
4. Product Acceptance (Inventory Report): Ensures quality tolerance by detailing the results of inspecting received goods for quality and compliance.

Flourish enables operators to support a best-in-class 4-way match process for cannabis operators to align purchasing, receiving, and finance teams, which reduces the risk of fraud and mistakes.

 

Flourish's Inbound Module

Our Inbound Module is essential for simplifying the cannabis procurement process in your facility. It sets the stage for comprehensive inventory tracking from receipt onward, accommodating both cannabis and non-cannabis items. It’s also pivotal in the 4-way matching process. Its primary function is to facilitate the seamless management and tracking of incoming inventory for cannabis operators:

• Efficient Receipt of Goods: The module simplifies the recording process of goods received, creating GRNs automatically and identifying discrepancies between the PO and received items. This ensures accurate tracking of inventory right from the start.
• Comprehensive Quality Control: The Inbound module integrates quality control features that allow for thorough inspection of received goods. Operators can easily record inspection reports within the module, ensuring that goods meet quality standards and adhere to purchase order specifications.
• Integrated Document Management: The module integrates seamlessly with the Accounts Payable system, ensuring that all relevant documents (POs, GRNs, and inspection reports) are linked and accessible. This integration streamlines the matching process and reduces manual errors.

The Importance of Having 4-Way Matching in Flourish

Implementing 4-way matching in Flourish with the Inbound module helps cannabis operators in several ways:

• Prevents Overpayments and Fraud: By aligning PO, GRN, inspection, and invoice details, operators avoid paying more than what was received or ordered.
• Enhances Financial Accuracy: Ensures accurate financial records and reporting by identifying discrepancies before they impact the books.
• Strengthens Supplier Relationships: Quick resolution of discrepancies and on-time, accurate payments build trust and loyalty with suppliers

Example of 4-Way Matching in Action

Here's a scenario of how 4-way matching works:

1. A cannabis operator orders 1,000 units of a specific product for $10 each and issues a PO.
2. The supplier delivers the goods and sends an invoice for $10,000.
3. The operator verifies the quantity received and records it in the GRN using the Inbound module.
4. A quality inspection reveals 900 units meet the quality standards, while 100 are defective.
5. The Accounts Payable team in Flourish compares the PO, GRN, inspection report, and invoice. If the billed quantity exceeds the accepted quantity or other discrepancies exist, payment is on hold until resolved with the supplier.

Diversifying suppliers is vital to mitigate risks associated with supply disruptions. The Inbound Module supports this strategy by allowing operators to manage multiple suppliers within a single platform, compare costs, and assess the quality of goods. This functionality not only helps in maintaining a versatile supplier network but also enhances negotiation capabilities, ensuring operators can secure the best prices and terms.

Cannabis Operators, Have Yourselves a 4-Way with Flourish

The 4-way matching process in Flourish, enhanced by the Inbound module, ensures cannabis operators maintain financial accuracy, avoid overpayments, and build strong supplier relationships. Automated 4-way matching optimizes efficiency, detects discrepancies, and ensures compliance with regulations, making it an essential tool for the cannabis industry.