Is your A/P operation really all it can be?

Even if you’re pretty sure it is, how could you prove that to someone else in your company?

The best way to do that, of course, is to measure it. After all, if you can measure something, you can improve it.

But in order to measure aspects of your performance, you need to determine what’s worth measuring and what your targets should be.

Experts suggest focusing on these five aspects of Accounts Payable:

• time it takes to process each invoice
• the percentage of invoices paid on time
• time on the job spent managing disputes, reconciling discrepancies and processing exceptions
• number of invoices processed by each A/P staffer in a given period of time, and
• percent of your invoices that qualify for early pay discounts

Decide on a fair time period to measure “average” performance and establish normal performance benchmarks.

One major influence on A/P performance is how much technology has been integrated into your system. Obviously, the more automated A/P operations are, the smoother and faster they should run.

Still, the Aberdeen Group offers guidelines as a suggestion.

Aberdeen breaks down A/P performance into three categories: best in class — the top 20%, industry average — the middle 50%, and laggards — the bottom 30%.

• Best in class:  $4.60 to process an invoice, taking an average of 4.4 days
• Industry average: $12.20 to process an invoice, taking an average of 14.4 days, and
• Laggards: $55 to process an invoice, taking an average of 34.4 days

Tags: A/P, Accounts Payable, benchmark, invoice