3 Metrics to Monitor With Accounts Payable Automation

It goes without saying that most organizations that pursue AP automation have a vested interest in reducing the cost of processing an invoice. Upon successfully automating a major subset of their invoices, that interest becomes a reality.  It follows then that tracking organizational CPI is a byproduct of a healthy automation initiative.  However, several other metrics don’t get the attention they deserve before automating but should be paid attention to after an Accounts Payable automation program has been launched.

Here they are:

1. Invoices In Approval – This view focuses on invoices that have to undergo an approval process. Most of the time, this will be Non-Purchase Order-based invoices, though in some cases, Purchase Order based invoices can be included as well.  The reason you want to follow these carefully is that the longer the Approval processes take, the greater the likelihood of you missing the vendor’s terms and being subject to additional processing fees or drawing the ire of your vendor.

2. Invoices in Exception – Essentially, this is a view into invoices that are discrepant against PO data. This could be caused for numerous reasons, including unit of weight and measure issues, items not received, or errors during the ordering process.   The bottom line here is that there is a bevy of issues that any one of which can take an invoice offline from being fully automated and will require the work of a sentient human exception handler to either troubleshoot or liaise with someone who can address the issue.  That’s not something you want to leave to chance for the reasons mentioned above in Point #1.

3. Invoice Submission Stats – What we’re referring to here is specifically for the AP organization that has broadened its ability to be able to ingest multiple forms of invoices. Now most companies are taking in increasing numbers of emailed invoices.  While that looks good in certain benchmarking studies as a measure of non-paper invoices, it obscures the reality of the invoice intake situation for many AP organizations.   As with most things, the devil is in the details.  While suppliers do themselves a favor by sending their customers their invoices via email, once it is received on the customer end, it is typically reviewed electronically and then printed for approval routing or archival. So on the surface, the invoice supply is accelerated, but the cost burden is shifted from the supplier to the customer. Output costs are in the vicinity of $.25-$1.00 per page depending on stock, toner, and hardware costs, let alone postage costs (elimination of which really benefits the supplier more so than their customer).

With that said, monitoring how your suppliers are passing their invoices to you is important, as it is preferable to get invoices into the Accounts Payable process faster, which alleviates processing time pressures against invoice term deadlines. As a business driver, for organizations that are pursuing AP automation, this can be used as an additional value add to drive electronic invoice submission to their suppliers through direct email submission or via a vendor portal. Either way, with solid automation in place, the need to output and circulate or archive is eliminated, and a slew of extraneous costs evaporate from the equation, which results in a win for both customers and suppliers.

Summing it up:

Many different items can be monitored when you pursue AP automation as the index data from invoices is aggregated and structured in a database format.  We’ve highlighted a few that have significant business impacts from our perspective. Still, we’re eager to hear what areas of your AP organization you want to monitor more and get better insight into.

If you want to learn more, click here to schedule a free demo of our powerful AP Automation Software, APSmart.