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

It’s probably because many vendors have been slow to make the switch from paper invoices.

Electronic Invoice Presentment and Payment (EIPP) has grown much more popular over the past two years, as an increasing number of have made the decision to let go of the security they associate with paper invoices.

Even though EIPP usually proves a value proposition for vendors, many have been reluctant to change their way of doing business.

Several fiscal roadblocks have been cited:

• allocation of time
• IT resources, and
• correctly identifying, purchasing and implementing the right system.

EIPP companies have been listening, and making it easier for suppliers to get on board.

For one, some of the software now on the market allows vendors to use their current billing system to send e-invoices securely. It used to be that making such a switch meant a lot of time and expense in adapting existing billing processes.

There’s another big incentive. As the technology grows and becomes easier to adopt and use, the return on investment has increased, too.

In many cases, Accounts Payable departments have reduced costs by up to 50% in only a six-month time frame.

Your peers in Purchasing/Procurement have three main concerns about what happens with invoice automation. Fortunately, since others have been out there clearing the way, there are now three reasonable explanations for each of these complaints.

Too much money. One reservation is that the cost for Accounts Payable to implement and administer automated invoicing is too high. Take a step back for a moment and look at the stacks of paper and tons of files, that all must be handled manually; data entry; matching PO invoices — and exceptions, not to mention what you do with deductions and discrepancies. Whew — talk about labor intensive! Research done by AberdeenGroup estimates the average cost of manually processing invoices is $21. But companies that automated invoicing functions saw that price drop to an average of $10 per transaction — and only $2 in some cases.

Too much time. Installing a new system, learning how to use it, working out the bugs, training others … Wait — think about it for a minute. How much time does it take to manually enter data, manually validate PO invoices, send information around to different people in your office — and wait for the proper paperwork and necessary aprovals to to come. Once your automated invoicing is up and running, you’ll streamline most of these processes, and that frees up A/P people to tackle more significant challenges.

Too many errors. Thanks to the ability to scan documents and store the images as electronic files, you slice the margin for error. There are so many sources for introducing errors when handling invoicing manually: mis-keyed strokes, duplicate payments, mis-coded invoices. Automation will remove the threat of human error from many of these processes. 

Companies can save significant amounts of money by automating many of the time-consuming functions of Accounts Payable, according to Aberdeen Group’s Advancing Accounts Payable Automation report.  Main drivers behind the slow shift to automation are the twin benefits of reducing A/P costs and improving departmental performance.

The report trots out plenty of interesting statistics that can make even the most cynical managers sit up and take notice. For example, A/P pros were asked to name the top drivers on the road to improvement:

• Lower costs for invoice processing — 61%
• Reduce the time it takes from order-to-pay — 50%
• Make it easier to predict expenses — 28%
• (Those surveyed could give more than one answer.)

The real impact of automation efficiency is exposed by the stats compiled of the cost of processing an invoice:

• Best in class — $2.00
• Industry average — $10.54
• Foot draggers — $58.09

Another part of the beauty of automating these processes, supporters point out, is the increased visibility into exactly how suppliers are holding up their end of the bargain. Thirty-five percent of those businesses report success in judging supplier performance. Meanwhile, those who still rely on manual processes admit they’re only seeing 15% of the action.

It can be done. And it’s not smoke and mirrors.

The secret: Greatly reduce the amount of paperwork involved in the Accounts Payable process. Paper opens the door to a host of errors, according to a recent AberdeenGroup report. When staffers have to punch in data by hand and manually match invoice information, you can expect high error rates and increased costs.

The more invoices you receive (and process) electronically, the fewer your opportunities for errors. This process of electronic payment capability is commonly known as e-payables when referring to Accounts Payable processes.

Employing e-payables can increase the efficiency of:

• invoice receipt and handling
• reconciliation and approvals
• disbursement scheduling
• settlement, including confirmation and reporting, and
• internal and external service support

 Bottom line: Companies that streamlined the A/P process by doing away with most paper in favor of automation showed they could reduce the costs of processing invoices from receipt until the bill’s paid. At the same time, those companies reduced the amount of time it took for the same invoice-to-payment function.