Change is permanent, as you know. Have your Accounts payable KPIs changed? Technology encompasses all industries today, and the Accounts Payable department is no exception. The work from home mandate also warranted rapid technological advancement to help organizations and individuals adapt to the new normal during the pandemic.
The impressive technological progress has allowed companies to use various software to maximize work productivity.
New tools empower organizations with critical performance information that helps to make quick and accurate data-driven decisions. But hey – if you are still measuring the old Accounts payable KPIs – You can prioritize and utilize valuable KPIs by coupling business goals with the available data from modern automation software.
Tracking KPIs is valuable to your business. It is essential for optimizing control, and this needs modern KPIs. Therefore, instead of tracking the old KPIs you’ve continuously tracked for your business, it’s time to reconsider and select the most relevant KPIs that are compatible with modern AP teams.
With automated AP processes in the form of invoice automation available, it’s important to consider tracking the following KPIs:
Processing e-invoices is more cost-effective than paper invoices. Thus, it is worthwhile to start tracking the percentage of processed e-invoices. Cost per invoice is one of the most important KPIs that should get tracked. The KPI indicates the effectiveness of a business’s AP processes.
Using invoice automation software (with reporting capabilities) is your best option for monitoring this important KPI. On top of that, automated AP software is also great for reducing the average cost per invoice. According to APQC, bottom performers spend over $10 per invoice, whereas top performers spend approximately $2.07 per invoice.
Invoice processing time is another crucial KPI because you can track and understand the invoice lifecycle. By implementing an AP automation software, you’ll get a clear idea of the duration of every step of the invoice lifecycle.
An invoice automation software will also reduce the invoice throughput time. Therefore, tracking this KPI helps improve vendor relationships, stay on top of early-payment discounts, and close the month-end!
Monitoring invoice processing volumes as a KPI is vital efficiency and productivity indicator. Automated AP processes can help you increase the number of invoices processed by FTE and improve overall performance visibility.
Some challenges that you may encounter to track the KPI accurately include supplier collaboration, shorter invoice approval times, and invoice quality.
The invoice exception rate KPI tracks the total number of invoices with inaccuracies or errors. It’s essential to track the invoice exception rate because inaccurate invoices can affect other KPIs such as cost per invoice and invoice throughput time.
Invoice exception rate helps you identify and address the most common exceptions faced, such as invoice missing data, duplicate PO, etc. With automated AP software, you can bundle and classify anomalies. Your AP department can thus take the appropriate corrective actions faster.
Approval workflows can be the most time-consuming aspect of the invoice lifecycle. By tracking the average duration of invoice approval, you can successfully identify where the approval process gets bottlenecked. Based on waiting time and escalations, you will have the necessary information for optimizing the approval process. In this way, the invoice cycle time can get shortened.
There are innumerable benefits of tracking and acting on the most relevant modern KPIs facilitated by invoice automation. They include increased satisfaction, heightened productivity, and cost savings. You can also explore invoice automation with benefits like downloading invoices automatically from web portals. Adapt your strategy and consider tracking critical current accounts payable KPIs mentioned above!
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.