It’s hard to track operations improvement without having a baseline to measure against. But it’s not impossible.
The Hackett Group’s research reveals a strong correlation between consistently benchmarking accounts payable operations and operating at a lower cost and delivering better value. Benchmarking also enables organizations to pinpoint their most substantial performance improvement opportunities, which is essential to developing a strong business case for full accounts payable automation.
Unfortunately, IOFM’s research finds that more than one-third (38.3 percent) of accounts payable organizations do not benchmark their operations, and 46 percent do not track Key Performance Indicators (KPIs), another effective tool for measuring individual and departmental performance.
Some of the most important accounts payable benchmarks operations should track include:
- Percentage of invoices received electronically
- Percentage of first-pass invoice match rate
- Percentage of invoice exceptions
- Days Payable Outstanding (DPO)
- Invoice cycle for purchase order-based invoices
- Invoice cycle for non-purchase order-based invoices
- Percentage of suppliers paid on-time
- Cost per invoice
- Number of invoices processed per FTE
- Percentage of early-payment discounts taken
Gathering data on these benchmarks not only drives operational improvements, it also provides a baseline for calculating savings opportunities from deploying a fully automated accounts payable solution, and winning senior management support for an accounts payable automation proposal.
Learn more strategies for developing a business case that will win senior management’s support for full accounts payable automation by clicking here to download our on-demand webinar.