What Gets Measured, Gets Improved – Part 3

Exception Invoices as a Percentage of Total Invoices

Our 8 part series discusses the importance of identifying Key Performance Indicators in Accounts Payable.  But why this topic? We address this topic because after all, “What Gets measured Gets Improved.”

However, oftentimes we get so hung up on metrics and measuring things to the point that we sometimes lose track of measuring what really matters.  There’s another saying, “Not everything that counts can be counted, and not everything that can be counted counts.”

So let’s summarize what should be counted before we move onto #3:

1. We discussed the importance of measuring the Number of Invoices Per Person / Per Day.  This metric helps you understand the efficiency of each AP employee.

2. Next we discussed: The Average Cost to Process an Invoice (By Invoice Time). This metric will tell you what is driving the costs, and in turn, it will give you insight on how to reduce those costs. This information allows you to address the expensive invoice types as well as the expensive processes.

Moving along….

3. Exception Invoices as Percentage of Total Invoices

As you are well aware, exception invoices cost more to process than “clean” invoices. Exception invoices drive up the overall processing costs for your department. It’s important to track the number of exception invoices as well as the dollar value of those invoices. Determine what is ending up in the exception queue. Once you identify them, log the details by the following: expense type, vendor information and the type of exception. Understanding what is causing these exceptions will help you address them and in turn reduce your processing costs.

Stay tuned as we discuss the remaining 5 KPI’s in this series!

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