Cost Per Invoice (CPI) is not a term that I coined… I’m not sure who did… however I hope one day to be known as the foremost authority on the subject. I guess I could be known for something worse… When I was a kid and had big dreams, but never did I say, “When I grow up I want to be the foremost authority on cost per invoice.” At the risk of self appointing a “foremost” title, I will write that I am somewhat obsessed with the notion of CPI. Every conversation I have with people considering automating accounts payable, companies that automate, and even industry analysts or fellow writers, I always end up taking the conversation to CPI (must be the middle child in me). Just by browsing through the history of my previous blogs you will notice 50% of them are concerning CPI and 80% of them reference CPI. (To the point… you are welcome) CPI is only part of the story. That is why I have come up with a new term and I am going to log this new term as CPIa… Ok, I don’t get point for being creative.. however this is an extremely important term to understand… just as important as CPI.
Here is the situation… CPI (Cost Per Invoice) speaks, as a black and white number, to the cost that an organization has in processing a paper invoice. CPIa (Cost Per Invoice Automated) speaks, as a black and white number – in a spreadsheet, to the cost a company has in processing an automated invoice. Both numbers are critically important because if you don’t know where you are (CPI) and you don’t know where you either can go or are going (CPIa), any road will take you there. This is simple benchmarking or goal setting that is usually dismissed, ignored or (in most cases) not known to the detriment of the implementor and implemented alike.
So here are some terms that, if you want to improve your automated AP process or go from paper to automated in AP, you have to know and track FOREVER!
CPI – Cost Per Invoice – (ask yourself) What is my current cost to process an invoice?
CPIa – Cost Per Invoice Automated (ask yourself) What can my cost be if I either improve my currently automated process or go from paper to automated?
New Time – What is the amount of time that I will gain if I automate AP or improve my current automation?
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