THESE 5 KEY METRICS WILL EMPOWER YOUR ACCOUNTS PAYABLE ORGANIZATION

AP AUTOMATION MAKES THEM EASY TO MEASURE AND TRACK

As companies realize this, they are finding that empowering the accounts payable function enables it to leave behind its costly manual, task-driven, accounting-centric image and take on strategic importance – even as a source of additional revenue – and that this empowerment transforms the way people work within the organization.

The most vulnerable area of accounting in any company

is the outflow of cash resources – the accounts

payable function.

How is this empowerment

possible?

THE STRATEGIC IMPORTANCE OF ACCOUNTS PAYABLE

Accounting departments are always busy measuring external business activity but they rarely stop to measure their own, or to think about empowering the spenders outside of accounting to leverage efficiencies.

You cannot change what you cannot see.

Accounting departments that improve efficiencies do so by embracing technology.

EMPOWERMENT STARTS WITH MEASUREMENT

AP SOLUTIONS HAVE BEEN DEVELOPED TO MAXIMIZE EFFICIENCY

AP Automation empowers you with tools for:

•  defining KPIs (key performance indicators),

•  measuring and

•  reporting on those KPIs for your Accounts Payable process.

What are the key metrics you should be measuring?

5 CRITICAL PERFORMANCE INDICATORS FOR ACCOUNTS PAYABLE

1.  Cost per Invoice

2.  Invoice Processing Speed

3.  Productivity per Team Member

4.  Variance Analysis – Correction Rate

5.  PO Matching Speed

•  Cost of employee time spent pushing paper through approval process

•  Cost of check processing and mailing •  Copying, printing and mailing costs •  Office space and storage •  Missed discounts, late payment fees and

duplicate payment •  Fraud, errors and lost correction time

How much do you spend today to process an AP invoice?

Receiving, processing, approving and paying a vendor’s invoice involves a lot of touch-points with direct or opportunity cost.

KPI #1 – COST PER INVOICE

COMPANIES THAT USE AP AUTOMATION SAVE 80% ON THEIR COST PER INVOICE

Organizations Performance* Top 20% - Best in Class $7.78 average cost to process an

invoice from receipt through settlement

Middle 50% - Industry Average $12.05 Bottom 30% - Laggards $37.45

Full procure-to-pay further reduces these costs with integrated E-Payments. Where does your organization fit? Can you measure?

*Aberdeen Group, 2011. E-Payables 2011. Efficiency, Visibility & Collaboration in the Financial Supply Chain.

How long do your invoices take to travel through the approval channels for

payment to be completed?

Organizations Performance* Top 20% - Best in Class 5.3 days to process an invoice from

receipt through settlement Middle 50% - Industry Average 10.2 days Bottom 30% - Laggards 24.5 days

How does your processing speed compare to companies that are using

AP Automation?

KPI #2 – INVOICE PROCESSING SPEED

*Aberdeen Group, 2011. E-Payables 2011. Efficiency, Visibility & Collaboration in the Financial Supply Chain.

FASTER INVOICE PROCESSING SPEED CAPTURES EARLY PAYMENT DISCOUNTS

Organizations Performance* Top 20% - Best in Class 90% capture rate for available early

payment discounts Middle 50% - Industry Average 47% capture rate Bottom 30% - Laggards 18% capture rate

Is your early payment discount capture rate where you want it?

*Aberdeen Group, 2012. AP Invoice Management in a Networked Economy.

For example: 36,000 invoices annually with 3 accounts payable staff is 1,000/month/ FTE. But you must factor in that only 75% of the steps are completed by the AP Clerks and the rest are non-accounting staff. Your FTE is really 3.75 – which lowers that KPI to 800 invoices per month.

Take the number of all your accounts payable invoices per month and divides that by your FTE and then factor in who does what in the process.

Is each member of your team equally productive? How can you measure?

KPI #3 – PRODUCTIVITY PER TEAM MEMBER

•  Measure what you are doing today and be confident that this will double through automation with a system like BeanworksAP

•  You get the added benefit of KPIs produced by team member with clear records of activity that enable you to improve productivity

Industry standard in a manual accounts payable environment averages around 750-800 invoices per month.

With AP Automation, you can expect to double this number.

PRODUCTIVITY PER TEAM MEMBER

•  Are you line items coded to the correct budget item?

•  Do you have the right eyes reviewing the invoice?

•  Who controls where the invoice goes? •  Can you see it while it is in the process? •  How do you manage split invoices? •  Are invoices being processed and paid twice?

Data Entry Errors: Why are they happening? How can you stop them from occurring?

Start by tracking your month-end variance error corrections.

KPI #4 – VARIANCE ANALYSIS: CORRECTION RATE

•  Workflow automation allows you to pre-program where invoices go and to instantly see who has them

•  Automation ensures the right set of eyes have approved your AP before anything is transferred into your account system

With AP Automation, your variance report is in place

and reflects the real-time situation.

An automated process

automatically flags

duplicate invoices for you.

VARIANCE ANALYSIS

When an invoice arrives, if a fully-coded purchase order is associated with that invoice, the process should be simple and easy. In paper-based systems however, POs are often added as an afterthought to make accounting happy. This manual process provides little control and no visibility for a company’s committed spend.

Invoices are typically grouped into two types:

•  Purchase order-based invoices

•  Invoices with no purchase order

How long does it take to

accurately match your POs to

invoices today? What is your

exception rate?

KPI #5 – PO MATCHING SPEED

Exceptions rates will decline dramatically

and in parallel with the ability to quickly

re-route for correction.

With an automated procure-to-pay process POs are matched

automatically to invoices.

Auto-matching enables better

control of your cash flow and

allows you to take advantage of

early payment discounts.

PO MATCHING SPEED

5 CRITICAL KPIS IN ACCOUNTS PAYABLE

Key Performance Indicator Target with AP Automation

1 Cost per invoice through to payment Under $5 2 Invoice processing speed receipt to

payment Under 4 days

3 Productivity per team member Expect to double this metric 4 Variance analysis – correction rate From current rate to negligible 5 PO matching speed Auto-matching is instant and

accurate

Compare your KPI’s to these Best-in-Class users of AP Automation Software

AP AUTOMATION IMPROVES YOUR KPIS BY ELIMINATING

SUMMARY

•  AP Automation solutions enable your accounts payable department to get Best-In-Class results

•  Solutions such as cloud-based AP automation BeanworksAP track

and measure these KPIs on a daily basis

•  With this information, comes the empowerment to manage and

modify processes to reach optimal efficiency

A “TOUCHLESS” AP AUTOMATION SOLUTION BENEFITS MANY AREAS

•  Maximize supplier discounts – 2% per month adds up

•  Integration with E-Payments reduces time and costs further

•  Import data versus manually keying it into your accounting system

•  Give your approvers and spenders mobile access to help make faster and more informed decisions

•  Get it right BEFORE it gets recorded as a liability

•  STOP FRAUD and make your auditors happy!

KEY POINTS TO CONSIDER WHEN ASSESSING AP AUTOMATION SOLUTIONS

1.  How configurable is it? Will it work with your workflow? Or will you have to change your processes?

2.  Does it handle multiple companies? Do you have manage more than one legal entity? Can you see all that spend in one easy place or will you have to manage multiple logins?

3.  Does it have an intuitive customer interface? Will non-accountants find it easy-to-use?

4.  Is the solution cloud-based? Can you access it anywhere, anytime?

5.  Is there a mobile application for your travelling invoice approvers?

6.  Is there a simple dashboard for reporting on your team metrics at your fingertips?

7.  Can you access critical accounting information quickly when you need it?

8.  Does the solution provide the capability to manage full Procure-to-Payment?

FIND OUT MORE ABOUT HOW AUTOMATION CAN EMPOWER YOUR AP DEPARTMENT

Contact:

Beanworks Solutions Inc. www.beanworks.com

info@beanworks.com

Toll-free: 877-959-2326 x150