Must Have Metrics for Accounts Payable

Compare your AP process to the best-in-class

Based on experience and interviews with people at hundreds of organisations of all sizes, in diverse industries, Accounts Payable Network have established metrics that every accounts payable department should consider in benchmarking their operations against the best in class. Some of the key parameters are listed below:

  • Input Quality – Invoices, expense reports, accruals, accounting adjustments, purchase orders, check requests, vendor setup requests and inquiries received by Accounts Payable that require exception processing are typically a small percentage of total transaction volume, but are often a significant percentage of total processing effort. While Accounts Payable should measure the quality of all inputs, invoices typically represent the greatest transaction volume, so the invoices are the initial focus when looking at input quality.
  • Input Timeliness – When Accounts Payable does not receive invoices in a timely fashion, it may not be possible to process and pay them within terms. As a result, discounts may be lost and the impact may be significant. You should be able to track invoices received by Accounts Payable that are eligible for prompt pay discounts or are subject to finance or late charges so their processing can be prioritised.
  • AP Process Quality – A key goal of every Accounts Payable department is to process transactions correctly. Errors are costly, and understanding their causes should lead to improvement. If a problem is detected within Accounts Payable, the type of problem and the person causing the problem should be tracked along with transaction information such as the vendor, submitter/approver, type of transaction and amount.
  • AP Process Timeliness – Measuring and monitoring Accounts Payable processing timeliness is key to understanding what is going on, setting standards and expectations. Different types of transactions may take different amounts of time. In addition to measuring timeliness and the backlog of transactions, it is useful to measure AP’s responsiveness to inquiries and investigations.
  • AP Output Quality – If the number of problems are high or increasing, there are likely to be issues with internal controls and/or information in the vendor master file. The source and cause need to be identified so that corrective actions can be taken.

Data Capture Solutions offer invoice automation solutions which help you achieve best practice standards in your AP process. By automating capture, classification and workflow of invoices, credit notes and other accounts payable documents, you increase the number of invoices processed straight through and reduce exceptions.

To find out how you can cut per invoice processing costs and achieve better cash control in your AP process get in touch with one of our business consultants on 01753 616720 or send an enquiry using our Contact Form.