One of the reason I like working with middle market companies is because they are not too big to get the attention of the CEO or owner for certain projects. When it comes to CEOs very rarely do I interact with them. I don’t know if it’s because they don’t care about Accounts Payable processing or if they just have other things to do… you know – well delegated.
CEO’s know the importance of Accounts Payable. I haven’t met a CEO yet that’s didn’t care about their organization’s expenses and knowing what those expenses are. I am not 100% sure that CEO’s in general care about the process of Accounts Payable. Below are six metric that will give a CEO information they can use to run the company.
- ROI – Initially, CEO’s use return on investment to make sure the project was successful. ROI is a great, simple, benchmark that gives you a thumps up or thumps down on an AP Automation project.
- DPO – This stands for day’s payable outstanding. DPO measures the efficiency of how the company pays its suppliers. For CEO’s this is a great tool to watch the accounting team overall… not that we need it.
- CPI – I know you knew this would be one of the metrics. I can’t write an article without mentioning cost per invoice. Even though CPI is a component of ROI the reason the CEO would like this measurement is to know how the company’s expense based processes are doing. CPI will tell the CEO on a frequent basis how much the process cost the company.
- Cycle Time – Similar to DPO, cycle time (sorry for no three-letter acronym – TLA) focuses on the approval process, so it has the ability to, with a number, measure the efficiency of the staff rather than the entire process.
- Discounts – There are a lot of ways to slice this number but the way that I recommend and CEO’s seem to really like are how many discounts were captured for a particular time (usually a week or a month) and the discounts that can be captured on a certain day or week.
- Late Fees – I know this is a negative number that sometimes we don’t want (as accountants) anyone to know, but the CEO should know. Too many late fees or late fees from a certain type of invoice is an entire business problem… Not just accounting. The whole business should be part of the solution too.
Just the CEO?
Normally when I write about the CEO it comes across as a single person. Although in most companies, it is a single person, however I think these metrics can work well for a leadership team or a board of directors. It’s a great way, once you are automated, to dispense information to show process.
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Categories: Accounts Payable Automation