AP Automation Metrics – What To Measure And When

There are a few phrases that I use too much. I know this, but they just seem to work for me. Today’s overused phrases of the day is, “you can’t manage what you don’t measure”.

It’s A Good One!

The fact is, the phrase has been over used, but it’s a really good one. AP Automation is no exception to this over used group of words.

What To Measure?

Here is a list of the critical few metrics you should know when you are starting and throughout the life of your AP Automation journey.

  • Cost Per Invoice
  • New Time
  • Cycle Time
  • Approval Time By User
  • Vendor’s Productivity
  • Accrual
  • Life Cycle

Explanation:

I believe it’s always a good practice to start with a definition.

  • Cost Per Invoice – This report measures the total cost to process an invoice from the time it is received to the time it was entered into the accounting system and filed.
  • New Time – This report measures the amount of time that is freed up by AP Automation.
  • Cycle Time – This measures the amount of time is takes to process an invoice.
  • Approval Time By User – This report will show who is doing certain approvals and how much time it takes.
  • Vendor’s Productivity – This report will measure the voids, errors, late fees and missing invoices of a certain vendor.
  • Accrual – This shows the invoices that are not approved for a certain accounting period.
  • Life Cycle – This report will measure the entire time from contract (PO) to invoice, to accounting system to pay.

When?

Now, this is the tricky part. I have written a lot about this, but I think it is worth repeating. Tracking anything with Accounts Payable Automation is a process not an event. If you run the above reports once you are doing your company a huge disservice. Taking the same list, here are a few good times to run the reports and analyze the results.

  • Cost Per Invoice – Before you automate and after you automate. It’s also good to run this one on an six-month ongoing basis.
  • New Time – Before you automate. It will help you determine which service provider is the best fit.
  • Cycle Time – Every week after being automated.
  • Approval Time By User – Every week after being automated.
  • Vendor’s Productivity – Once a month. This information will help you spot the problem vendors. It’s much more effective to find and deal with the problem vendors, than treat them all as problems.
  • Accrual – End of the month, quarter and year.
  • Life Cycle – Once a month. This report will tell you how everything is doing.

Want to know more? Buy My Books!

To buy the book – The Argument to Automate – How Innovation Can INSPIRE Not Fire – click here to buy

(Also) To get your copy of The 8 Pitfalls of Accounts Payable Automation – click here to buy

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3 Comments

  1. […] lot of companies enter their AP Automation life with a similar approach to scanning when really the percentage is less important than why you […]

  2. […] provider will “provide”. This is why I think the request for proposals (RFPs) are so bad in the AP Automation world because they never seem to expose the amount of services available. The new time study will […]

  3. […] will be no problems… Just use the principles of good project management. It helps but not having AP Automation experience will create way too many starts and stops in the project where roadblocks are rammed […]

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