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Shows Senior Management the Money: Part 4 of 5 – Benchmarking AP Operations

By Kanika Sharma
In E-Invoicing
Jan 31st, 2018
0 Comments
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In part 1 , part 2 and part 3 of the series, we saw the first three steps of building a winning case to implement an eInvoicing based AP automation solution.

The next step, spoken of in this blog, is to use benchmarking to focus on performance improvement opportunities.

STEP 4: BENCHMARKING ACCOUNTS PAYABLE OPERATIONS

Aggregating and analyzing data of commonly tracked AP benchmarks from a supplier portal not only provides a baseline for calculating savings opportunities but also drives operational improvements.

However, IOFM’s research finds that more than one-third (38.3%) of AP organizations do not benchmark their operations, and 46% do not track Key Performance Indicators (KPIs), for measuring individual and departmental performance.

The Hackett Group’s provides very relevant information for benchmarking your AP operations against the ‘world-class’ organizations. According to The Hackett Group Performance Study, 2015 (and still relevant today!), here are some of the key metrics to benchmark yourself against:

PERFORMANCE AREA

PEER GROUP

WORLD-CLASS

% of Suppliers Accounting for 80% of Invoice Volume

8%

4.5 %

% Invoice First-pass Match Rate

73%

90%

% Invoices Received Electronically 19%

70%

Days Payable Outstanding (DPO)

35 40
% On-time Invoice Payment

78%

90%

Cost per Invoice $4.80

$2.27

Invoices per FTE

7,126 17,357
Early Payment Discount Taken as % of Available 78%

85%

Early Payment Discount Taken as % of Spend

0.002% 0.11%

Invoice – PO (days)

10.8

3

Invoice Cycle – Non-PO (days) 15.8

3

In the final and concluding part of this blog series, we will focus on the calculation of potential savings which an organization can capture by deploying a supplier eInvoicing portal.

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Work as a Senior Marketing Executive with Zycus.

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