Even in the digital age, many accounts payable (AP) departments remain inundated with paper and manual-based processes … which seems crazy when a recent study by Aberdeen Group found that 60% of organizations identified eliminating complex and/or risky processes as a top priority for digital transformation.
Process metrics are the key to improvement
Managing all of the paper in your AP department isn’t an easy job, and it doesn’t leave much time to assess your process and find where issues are. But to make improvements, you’ve got to start somewhere — and Key Performance Indicators (KPIs) are a great place.
The 7 essential KPIs of accounts payable
Don’t worry, we’ve got your back. This SlideShare will give you a head start in exploring the effectiveness of your process with the 7 fundamental KPIs of AP. Let’s jump right in!
How can you identify problem areas in your process?
- Measure the number of invoices processed per employee (or per month). You’ll notice an impressive boost in productivity after automating your invoice processing.
- Calculate the cost of processing each invoice. They quickly add up to an expensive AP process. According to a 2015 PayStream Advisors study, the average all-inclusive cost to manually process an invoice is $40.70. Yikes!
- Gauge the timeliness of your payments. Chances are you’re missing out on early payment discounts if you’re having to manually process invoices. That’s more money down the drain.
- Measure your captured discounts. Don’t have any? That’s a red flag for bigger problems within your AP department.
- Check the level of automation already implemented … if you have any. Sorry, email doesn’t count as automation!
- Determine the percentage of duplicated invoices paid. Your supplier may enjoy the extra payment, but we promise your boss doesn’t.
- Calculate the percentage of erroneous payments. Payment errors put a large strain on the AP department.