![]() Though humans make mistakes, you want this number to be low.ĭuplicate payments, overpayments, and other erroneous payments can be a huge drain on a company’s finances. This metric measures the number of erroneous payments made over a certain period of time, divided by the total number of invoices paid over the same period of time. Rate of wrong payments as a percentage of total payment. Complete automation is the best way to do this.īy accelerating workflows, you’d be able to eliminate late payment penalties and make your company more easily eligible for early payment discounts.ĥ. If it’s high, you should streamline your AP processes in order to accelerate your workflows. A low invoice cycle time is definitely a good thing. This metric can help you identify which tasks take the most time, and it generally informs you how your team spends their time. It measures the average working time it takes to process an invoice from when it is received to when it is paid and archived. This is where you track the average receipt-to-pay time. With automation, you won’t have to spend big money on manual data entry as you’ll be able to auto-capture invoice data quickly.Ĥ. Generally, the cost of an automated system is lower than the cost of manual operation. Invoice type also matters, as exceptions and non-PO invoices are more costly to process than straight-through and PO-based invoices, respectively. In tracking invoice costs, consider things like software fees, paid IT support, cost of hardware, staffers’ salaries and benefits, managerial overhead, and other things of financial consequence. You’ll also be able to find ways to reduce your invoice spend and reduce costs. Cost is one of the most important accounts payable metrics to track as you’ll be able to gain insights into factors that drive it. Striving to improve this metric will improve your team’s efficiency and effectiveness.ģ. If it’s not, then something is wrong and you need to re-evaluate your strategy.Ĭould there be unidentified bottlenecks that slow down processes along the way? Are some parts of your AP workflows still managed manually? Are there issues with exceptions? Whatever the obstruction is, identify and remove it. For long-term analysis, like three or six months, this number should be above 90%. The reason for tracking this metric is to measure your AP team’s work rate. Total number of invoices processed as a percentage of the total number of invoices received within a period of time. ![]() The total number of invoices received directly depends on the size of your organization - the bigger the company, the more bills it has to pay, and the more invoices it’ll receive.Ģ. This knowledge will give you an idea of the normal volume of work and let you set some baselines to make it easier to measure other metrics. ![]() It can be daily, weekly, monthly, or even yearly. Before you measure any metric, you should want to track the total number of invoices that come into the accounts payable department within a certain period of time. Total number of invoices received within a given time period. The key accounts payable metrics to trackġ. If pulling a few numbers in order to get better results sounds intriguing to you, read on to discover the most important accounts payable KPIs to track. With it, you’ll be able to make decisions based on data, instead of guessing based on limited information. It lets you see what’s working and what’s not in your current AP strategy. Visibility is important for efficiency and growth. Tracking also provides clearer visibility into your invoice processes and approval steps. If you don’t track your accounts payable metrics, you may not know how productive your team is or how potentially productive they can become. These metrics are key performance indicators (KPIs), which can be used as measurable values to show how effectively your AP team is meeting targets and achieving departmental objectives, and to determine how to best make use of time and resources. Without tracking, measuring, and analyzing your metrics on a regular basis, it will be difficult to identify AP areas that require changes. Tracking your AP metrics is beneficial in many ways, but the ultimate aim is to measure and analyze results for improvement. Why should you track accounts payable metrics? In the end, you should be able to to straighten out your AP workflows and optimize your invoice processes considerably. In this post, we’ll explain why this is important, which accounts payable metrics to track, and how to use each one to improve your invoice processing system. In automating your accounts payable (AP) processes, it’s essential that you track some key metrics.
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