Important Accounts Payable Metrics
1. Invoice Processing Costs:
What's your cost to process a single supplier invoice?
There are many factors that affect the cost to process a single supplier invoice. Many of these costs are attributed to the "clerical duties" performed by skilled accounting staff. These clerical duties include opening incoming mail, sorting and staging invoices into batches, sending paper invoices to approvers for proper coding and approval, performing manual data entry of key invoice data into the accounting system for payment processing.
Many studies have been performed by trade associations i.e. Paystream Advisors, Aberdeen Group, The Accounts Payable Network, IOFM and many more. The statistics have shown that the average cost to process a single invoice is roughly $15 dollars and companies with significant accounts payable processing challenges have seen their costs in the range of $38.00 per invoice. Organizations that have implemented some level of accounts payable process improvement have realized a significant savings of 60-80% over manual invoice processing with per invoice costs reduced to $3 dollars or less per invoice.
2. Invoice Processing Speeds:
How long does it take for your supplier invoices to process through your organization for payment?
The time it takes can greatly vary depending on the number of manual steps an invoice needs to go through for proper approvals, matching, coding and entry into your accounting system. According to the "Aberdeen Group" the average processing time to process invoices manually is between 24 - 30 days, while companies that have implemented some level of accounts payable process improvement have seen their processing times reduced down to 5 days or less.
3. Productivity Per Team Member:
Are your accounts payable team members equally productive?
Take the number of accounts payable invoices per month and divide by the number of invoices processed. You should also factor in the tasks performed by each team member. It is estimated that 75% of the labor and time associated with processing supplier invoices is performed by the accounts payable department.
Measure the time it takes to process an invoice today and you can be assured that accounts payable automation will double the throughput and significantly reduce the costs to process an invoice.
4. Variance Analysis/Correction Rates:
Variances can be caused by many factors, however the time it takes to correct them can cost your company more than 10 times the costs to process a single invoice correctly!
Are line items coded correctly? Are manual keying errors causing bottlenecks? Are you able to report on variances in a timely manner? With accounts payable automation rules can be put in place to correctly process invoices and flag those invoice with issues and route them for resolution and instantly report on any variance or processing issues.
5. PO Matching Process and Speeds:
The process to manually match an invoice and the time it takes can vary dramatically between organizations, processes and definitely between people. Let's face it - some people are just faster than others and some accuracy varies.
With accounts payable automation business processing rules can be applied to "automatically match" invoices against your purchase order, receiver, vendor master or any other criteria. When applying these "auto-matching rules" invoices can be "automatically coded" to eliminate the need for manual data entry, hence eliminating the "fat finger" problem.
6. Invoice Entry:
Invoice entry largely relies on skilled accounts payable staff to take the time to enter by hand the information from a supplier invoice into the companies accounting system. As you might expect manual data entry is "error-prone" and relies on people.
With accounts payable automation the data captured during the routing, matching, coding and approval of invoices is transferred into the accounting system, "error-free".
With Vision360 Enterprise accounts payable departments can expect to eliminate all of the manual touch points and process associated with process, paying and maintaining supplier invoices. With Vision360 Enterprise there is nothing to purchase, no software licensing restrictions, no annual software maintenance and very little IT resources needed. Vision360 Enterprise automates the routine steps involved in approving invoices. Once supplier invoices are captured, the invoices can be routed to approvers based on business rules, through multiple levels of approvals, coded and released for payment.
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Vision360 Enterprise Accounts Payable Automation Solution by BlueCreek Software reduces time wasted chasing down paper invoices by automating invoice approvals, eliminating manual data entry, eliminating paper invoices and reducing processing costs.