What Gets Measured, Gets Improved – Part 2

What Gets Measured, Gets Improved – Part 2

8 Key Performance Indicators in Accounts Payable

Invoices

We recently began a series entitled “What Gets Measured Gets Improved.” We discussed the importance of metrics or Key Performance Indicators in order to make improvements—actual, tangible improvements. In fact, the accounts payable process is no different. We started our series by listing the 1st KPI in the Accounting/Finance world: Number of Invoices Per Person / Per Day. In summary:  this metric helps you understand the efficiency of each AP employee. Now it’s time to discuss the 2nd KPI!

2. The Average Cost to Process an Invoice (By Invoice Time)

Calculating processing costs can give you important insights. It will tell you what is driving the costs, and in turn, it will give you insights on how to reduce those costs.

When calculating these costs, it’s important to factor in the following: salaries and benefits, facilities and hardware, software and IT support and managerial overhead. In addition, determine the processing costs by various types of invoices, i.e., exceptions, steps involved in each process, data entry. All this information allows you to address the expensive invoice types as well as the expensive processes.

Stay tuned as we discuss the remaining 6 KPI’s in this series!

Powered by IBM’s FileNet and Datacap technologies, our user-friendly applications help organizations reduce the average cost to process an invoice.