Grace Murray Hopper once said “One accurate measurement is worth a thousand expert opinions.” One of the most important business functions, Accounts Payable (AP), is commonly overlooked when measuring performance. However when done correctly, can provide crucial insights that drive efficiency, accuracy and overall better use of organisation’s resources. Join us as we run through why measuring the performance of your AP is important (we might even give you some small tips too!)
Let’s start with the example of Invoice Processing Times. Measuring the time to process an invoice, from receipt to schedule of payment might not sound important – but let’s look into it in further detail. Shorter invoice processing times not only richen relationships with your suppliers, but allows you to also take advantage of Early Payment Discounts whilst avoiding delayed payment penalties. As we can see, a small metric measurement can dramatically alter the bottom line of your company.
The above example is one of many metrics that demonstrate why measuring your Accounts Payable performance is crucial in your company’s success. Go check out our recent blog, ‘4 Key Accounts Payable Metrics You Need to Measure’ which outlines the metrics you should be tracking. Resource/Cost Usage is only one benefit of understanding your AP performance. Let’s run through the main benefits your company will usually see pretty quickly once you start implementing the strategies gathered from the insights of measuring performance.
Identify Recurring Issues within Accounts Payable
Underlying issues may be lurking within your AP processes that are not being accounted for. Measuring your performance is a way not to only create more efficient procedures but can also identify issues. An example is human errors, such as staff not submitting receipts or administration errors.
Tip: Spend Management Solutions have proven to reduce manual errors found in AP processes by up to 90%, see more here!
Reduce Costs & Resource Usage
As discussed earlier, the insights produced from measuring performance lead to strategies that help reduce time, cost and other resource expenditure. For example, measuring Cost Per Invoice is another common but powerful metric that is missed. The added consideration of human labour costs can increase an organisation’s average processing invoice cost significantly. A strategy can be implementing Invoice Automation or AP Automation, which has been proven to reduce invoice processing costs by up to 85%.
Gavin Finn from Peoplebank quotes “The ProSpend invoice module has automated our accounts payable process. As a result we have saved hard dollars in printing, filing, storage and man-hours. The return on our investment IS absolutely there!”
Staff Satisfaction & Productivity for Accounts Payable Staff
Many AP staff members tediously shuffle through paper and manually paying invoices, always asking themselves – is there an easier way to do this? Measuring the Number of Invoices per Accounts Payable Employee is a significant indicator of productivity and efficiency. If staff members are spending too much time on processing invoices, your team may lose productivity and also may start to be dissatisfied.
Tip: In the most recent Gartner Top Trends Report, 69% of CFO’s are looking to digitise their analytics. Software like ProSpend does not only do this, but can make your AP processes paper-free and cuts tedious processes, allowing your team to focus more time on growing the business.
Above are simply a handful of the benefits your company will achieve through measuring performance. Although measuring performance can be tedious in itself, it is a crucial task that all Accounts Payable professionals should undertake on a regular basis to optimise efficiency and maximise productivity.
ProSpend does not only automate the entire Accounts Payable process, it also comes with a complete LIVE Operational Dashboard that makes measuring performance a breeze. You can see this below. Why not trial the platform FREE here and see for yourself? Alternatively, you can chat with one of our specialists (Hint: mention this blog for a FREE Consultation 😉).