How do you measure your accounts payable performance? More businesses are shifting to an automated AP solution. And, consequently, more businesses than ever before are making payments electronically, and for good reason — payment automation allows companies to reduce their transaction costs while also allowing them to better track their performance. With payment automation technology, you can quickly and easily create reports that compile key metrics that can be used to improve their processes.
As management guru Peter Drucker famously said, “If you can’t measure it, you can’t improve it.”
While the treasure trove of data that payment automation provides is impressive, you must be able to make sense of that data to make it truly valuable and help you gain efficiencies in your accounts payable processes. When it comes to evaluating your AP program, certain key metrics are especially useful in determining its overall performance.
Top 10 Key Performance Indicators in AP:
- Percentage of overdue invoices.
- Total value of outstanding invoices.
- Exception processing and corresponding reasons.
- Percentage of electronic payments.
- Time taken to process an invoice.
- Number of invoices processed per full-time employee.
- Percentage of errors attributed to human error.
- Average cost per invoice.
- Number of duplicate payments.
- Average cycle time to workflow or percentage of invoices in review.
Tracking these key indicators on an ongoing basis can help you see how your AP performance is changing over time and identify opportunities for improvement. For example, if you notice that the average time to process an invoice has increased, you can dig further to determine why and what can be done to reduce that time. Likewise, if the value of your outstanding invoices has gone up, your payment automation system can then help you figure out the cause and identify a potential solution.
Interesting in learning more about payment automation? Read more about WEX Electronic AP Solutions.