Measure your Top AP and P2P KPIs

In an exciting new collaboration between The Hackett Group and sharedserviceslink, you can now access key AP performance metrics and get an instant, customized report on top AP and P2P KPIs.

You can access the free tool here to measure

• Invoice processing cycle time (for PO and Non-PO invoices)
• First-pass match rate – and the common reasons for failure
• On-time payment rate
• Days payable outstanding
• Cost per invoice

Shared services and finance practitioners who are registered on our website www.sharespace.digital.  (Vendors and consultants are not eligible for this service.)

You will get an instant report with charts like these:

Let’s take a look about why these KPIs matter:

Invoice processing cycle time (for PO and Non-PO invoices)

The invoice cycle time – the time paid from receiving to paying an invoice - is an important metric. High cycle times are usually a result of time spent on manual invoice processing. Automating AP to convert incoming invoices into an electronic format will speed performance, reduce errors, reduce paper, and provide support for any corporate sustainability initiatives. This means there is more time for value-adding activities such as tracking where invoices are being held up or delayed. Shortened cycle time means greater control of cash flow and greater capture of supplier discounts.

First-pass match rate

For first-pass match rate for invoices, you are looking at the percentage of invoices that pass straight-through the purchase to pay system without delay or manual intervention, from receipt of invoice to posting of invoice. A high first-pass match rates means you have good visibility of invoice numbers and goods received notes (GRNs) and Purchase Orders are raised correctly. If it’s high, and your invoices are matching with POs when required, it suggests you have a compliant, efficient operation, where buyers and suppliers are supporting your process requirements.

On-time payment rate

Being able to pay an invoice on time is representative of a healthy P2P operation. It means finance and procurement are working together. Procurement has negotiated terms that suit the needs of the business, and finance is aware of the importance of meeting these terms and runs its part of the process accordingly. In addition, paying on time, if not early can help your business capture payment discounts and avoid negative interactions with suppliers.

Days payable outstanding

Days payable outstanding (DPO) is the average time that a company takes to pay suppliers.  Businesses often, understandably, want to hold onto cash as long as possible. However in the last few years, companies have extended their payment terms to 60, 90 or 100+ days. Sometimes payment terms are extended because companies just need more cash in the bank to operate. However, many companies use long payment terms to free up working capital, boosting the balance sheet and the share prices. The best DPO for your organization will be one that meets the requirements of your Treasury’s working capital requirements as well as your suppliers. Long payment term can carry a reputational risk, which makes extending payment terms a gamble with your reputation and your supply chain.

Cost per invoice

From invoice receipt to payment, the metric measured in this tool includes the fully loaded labor costs of the AP team processing invoices and any annual cost of activities outsourced to a 3rd party processer. Knowing this costs is essential to your P2P operation, especially if you are charging your customer based on invoice type, or considering outsourcing, or interested in continuous improvement on your cost base.

Measure up your organization today!

Come prepared with this information plus your annual spend and invoice volume, and you’ll walk away with in instant, personalized snapshot (like the charts below) of how you measure up.

Take part today!