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 organizations go without a holistic view of their overall AP performance.
So what KPIs in Accounts Payable matter the most, and how can organizations get valuable insight in these areas? These are four of the most important accounts payable key performance indicators you need to keep a lookout for.
Financial KPIs for Accounts Payable
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.
One of the most, if not the most, important accounts payable KPI is 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 organization 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 an essential AP KPI to be able to measure 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 very important KPI in accounts payable 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.
Accounts Payable Automation with Palette
Invoice data capture
By using AI and capture automation, data is intuitively extracted from both paper or emailed invoices. 95% accuracy for paper, 100% for electronic formats. Our AP solution eliminates manual data entry, manual errors, and missed invoices and the process includes four steps:
- OCR & extraction
- Document classification
- Data validation & quality control
- Reporting & analysis
Paper and other manual-based processes slow down the invoice approval process significantly and are prone to human error. Palette’s AP software integrates with existing accounting systems to streamline the invoice approval workflow of both PO- and non-PO invoices by automatically directing invoices to the designated approver. Once approved the invoices are forwarded to the ERP for payment. Flag invoices or line items and send them to approvers for review and approval. Our solution provides the following functionalities:
- Automatic notifications and reminders
- No expensive coding or user licenses
- Drag and drop functionality for ad hoc re-routing
- Visibility into payment/approval status of invoices
- Email approvals with one click functionality in mobile
- Approvers get a complete package to review including invoice, PO, goods receipt and messages
3 way PO matching
Palette’s AP system matches your vendor invoices to internal or external purchase orders and goods receipts in a touchless process. The software eliminates manual searching and matching, allowing your staff to focus on more high-value tasks.
Archive and Audit
The supplier invoice archive and the log is fully searchable. Get access to a complete time-stamped archive of all invoices with full visibility into approvals and approval messages.
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 accounts payable KPIs. Analytics features like those provided with Palette’s solutions let you measure against these key accounts payable KPIs 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