We live in a world where almost everything can be monitored or tracked in some way.
From our calendars to our travel schedules, our Uber rides to our Starbucks orders, and our exercise routines to our heartbeat rate, progress is measured most often in seconds rather than minutes.
KPIs mean a lot of things to a lot of departments within a lot of organizations.
We reply on metrics to guide our decisions and future success. Nowhere is this more of a concern than with accounts payable.
An AP department can track an infinite number of KPIs. But more is not necessarily better.
Here are 5 KPIs almost every accounts payable department should focus on tracking.
1) Cost to process a single invoice.
Vendors aren’t suddenly going to stop wanting payments. AP departments should know what they are paying to process each invoice and have a strategy in place to mitigate costs.
2) Time to process a single invoice.
There is a reason people say time is money. To maximize AP’s profit-generating potential, companies must identify what is slowing their process down and how to fix it.
3) Number of invoices processes per day per AP clerk.
Measuring staff productivity is a way to optimize AP invoicing even further, as what you learn from this KPI can be used to improve multiple areas of your operation.
4) Percentage of invoices linked to a purchase order.
If it impacts processing time and cost, you better believe it is worth tracking. Smart AP department use this KPI to gauge how truly seamless their process is.
5) Invoice exception rate.
More than 1 in 6 invoices processed by the average company cause exceptions. To maintain process efficiency, AP departments can track and continually review this KPI.
Knowing what KPIs to measure is one thing but ensure you have the right technology in place to strategically coordinate and position the data you are collecting and reporting on is something that takes research and analysis.
Want to learn more about KPI reporting for your AP department? Click the link below for more information.