Top 7 Accounts Payable KPIs for Measuring Success
Published on:12 June 2023
Accounts Payable key performance indicators (KPIs) are critical metrics for any organization committed to excellence. Measuring the success of an Accounts Payable department is essential for optimizing its performance, identifying areas for improvement and aligning it with business objectives.
AP manager responsibilities should include accounts payable KPIs (accounts payable key performance indicators) that are critical to the success of their department’s processes. In this blog post, we discuss the top seven accounts payable KPIs that help AP managers measure the success of an AP department.
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One of the most important accounts payable key performance indicators is the ratio of touchless invoices. A primary goal of any AP department is to increase the number of touchless invoices.
A touchless invoice is one that comes into the AP system and is processed automatically without requiring any manual intervention. This accounts payable KPI measures the extent to which AP processes are automated. It indicates how well the AP department is utilizing automation to minimize manual data entry and reduce the potential for errors. Touchless invoices also increase efficiency and free up the AP team’s time so they can focus on higher value-added tasks.
A sub-category of the accounts payable KPI is the success of AI predictions. Artificial intelligence has a significant impact on the automation rate of AP processes, and this KPI measures how accurately AI has predicted the coding for a specific invoice.
On average, 15–25% of the invoices organizations receive are recurring invoices. With this KPI, AP managers can track how many recurring invoices were successfully matched against agreements and contracts.
E-invoicing is the process of sending and receiving invoices electronically. This KPI shows the percentage of e-invoices received by an AP department. E-invoicing reduces invoice processing time and costs associated with paper/PDF invoices. AP manager responsibilities may include a steady and continuous increase of the electronic invoice ratio.
Average processing days is a KPI that measures the average time taken to process an invoice from receipt to payment. Long processing times can indicate bottlenecks in the AP process, resulting in late payments, penalties, and the disruption of healthy supplier relationships. AP managers can use this KPI to identify where the bottlenecks are in the AP process and take action to streamline the process.
The payment KPI measures the percentage of payments made on time versus those that are late. Late payments can have a negative impact on supplier relationships and affect cash flow. AP managers can track this KPI to identify potential problems in the payment process and address them before they become larger issues.
The successful PO matching KPI measures the percentage of invoices that are accurately matched against purchase orders. It helps AP department to avoid overpayments, underpayments, and potential disputes with suppliers. This is a relevant KPI for accounts payable team leaders to identify areas where the PO matching process needs to be improved to reduce the potential for errors and disputes with suppliers.
Roles and responsibilities of accounts payable manager is changing fast. KPIs help to measure the effectiveness of technology and accounts payable processes. Each KPI for the accounts payable team leader reduces costs, improves efficiency, and builds stronger supplier relationships.
P.S. Are you looking to optimize your AP processes and take your AP department’s performance to the next level? Gain access to actionable insights including all the most critical KPIs for your AP department.
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