What Gets Measured, Gets Improved

8 Key Performance Indicators in Accounts Payable

There’s an old saying, “What gets measured gets done,” or as many of you have heard, “what gets measured gets Improved.” Oftentimes we get so hung up on metrics and measuring things to the point that we sometimes lose track of measuring what really matters; however, we should be very careful about what gets measured. This reminds me of another old saying, “Not everything that counts can be counted, and not everything that can be counted counts.” When it’s all said and done, we must make improvements—actual, tangible improvement.

The accounts payable process is no different, and there are certain metrics and performance indicators That should be measured at least once every six months at a minimum.

Unfortunately, Accounts Payable is still one of those places within a company where paper processing is still the rule, rather than the exception. With this said, there’s a great opportunity to make a big impact with automation. But first, you must get clear measurements of what’s going on now in order to move forward with any strategic initiative.

According to a recent report by PayStream Advisors, entitled “Invoice & Workflow Automation: Optimizing Invoice Movement and Management”, companies have made significant strides in their ability to receive invoices by electronic means such as email, EDI, web portals and networks.

However, receiving invoices electronically is only the first step in the invoice processing workflow. Many companies do not use electronic methods to continue the entire process. We know that the lack of visibility that comes with paper processing results in many challenges, including higher processing costs. What’s surprising is that nearly half of those surveyed did not measure processing costs.

According to study done by ASUG/SAP, entitled: “HUMAN CAPITAL MANAGEMENT: HOW TOP ORGANIZATIONS DRIVE COMPANY PROFITS EFFICIENTLY”, they discovered that a typical 10,000 employee company handles more than one million employee-related transactions a year at a cost of between $10 and $50 per transaction. Multiply this by 50 chains, and you’ll see why streamlining these processes can dramatically impact productivity.

Since the survey found that the biggest barrier to automation is the belief that current processes are working, doing some measuring to see if this is true seems like a good learning opportunity. PayStream suggests tracking at least 8 Key Performance Indicators.

In this series, we will discuss all 8, but first, let’s discuss number 1.

1. Number of Invoices Processed Per Per Person / Per Day

This metric helps you understand the efficiency of each AP employee. If some employees are more expeditious, they might be able to share tips or train others that are a bit slower. This measurement also empowers you to allocate certain invoice or accounts to certain people. These specialists can handle PO vs. non-PO invoices, or divide it by type of invoice, geographic location, business unit, and etc., and determine which works best.

Stay tuned as we discuss the remaining 7 KPI’s in this series!

Powered by IBM’s FileNet and Datacap technologies, our user-friendly applications help organizations improve on all 8 Key Performance Indicators in the Accounts Payable Department.