Without good data, it’s hard for a business to assess the success of its AP function. Poor data visibility can hide problems, increase risk and lead to compliance issues. Many organisations go without a holistic view of their overall AP performance.
So what KPIs matter most to Accounts Payable, and how can organisations get valuable insight in these areas?
1. Processing Time Per Invoice Type
Whether you use an AP automation solution or not, certain invoice types will take longer to process than others. The longer an invoice takes to process, the longer your team must spend on low value manual tasks rather than strategic activities.
It’s important then to see where bottlenecks lie to eliminate inefficiency, save on costs, and focus on higher value activities.
2. On Time Vs. Late Payments
Although every organisation wants to pay suppliers for goods and services on time, it’s rare that this is always what happens. Late payments lead to lost money through interest and fees, and a reputation for poor payment punctuality can have an effect on credit ratings.
Keeping track of this number is essential in measuring how well your workflows are performing, and identify where the issues are.
3. Discounts Captured
In many cases, discounts are offered in return for early payment. Do you know how often your organisation is able to pay in time to capture them?
Keep track of the number of discounts captured, the monetary value of those discounts and the number of missed discounts. Knowing when your organisation has taken advantage of discounts is a key metric for process performance.
4. Straight Through Invoices Vs. Exceptions
Even when using an automated solution, exceptions are manual work. The AP department must investigate the exception and work to rectify the issue. This can lead to late payment and becomes another task that takes time away from strategic activities.
Keeping the number of invoices that pass straight through without issues 100% of the time is not always realistic, but a high percentage ensures the AP team is working at peak efficiency.
Get Fast Access to Accounts Payable key Financial performance indicators
With a next generation AP automation solution your AP team can access rich data that enables visibility into each of these key areas. Analytics features like those provided with Palette’s solutions let you measure against these key performance indicators easily.
Palette’s AP Automation takes much of the manual work out of AP workflows, reducing the risk of human error and helping to continuously improve process performance.
Find out more about Palette AP Automation