Before automating your business processes, it’s important to identify the most meaningful metrics so that you can measure and analyze the results. Why do you need to choose accounts payable metrics to measure before starting with automation? Because without having data on your old processes, you won’t be able to determine the effectiveness of your new ones.
Let’s walk through some strategies deciding which accounts payable metrics to measure and what to do once you’ve chosen them.
Identifying Key Accounts Payable Metrics
The right metrics to measure are the ones that help to identify the time and costs involved in any given business process or workflow.
As you’re deciding what to measure, think about the metrics your company’s CFO would care about, as this blog by AmeriQuest suggests. He or she probably cares about things like cutting costs and easily passing audits, right? Those are great places to start.
Here are some other key metrics that relate to AP workflows:
- Invoice volume
- Time needed to process each invoice
- Number of people needed to process all invoices and their compensation
- Early payment discounts received and missed
- Late payment penalties assessed
Recommendation: Start simple with a small number of metrics and then add to them over time as needed.
Measurement & Analysis
You’ll want to begin with a baseline for all key AP metrics. You’ll then want to use the same baseline measurement process to evaluate these metrics on a daily, weekly and/or monthly basis to determine gains, losses and plateaus. Then address any metric falling short of your business goals.
For example, you may want to increase the number of invoices paid within 30 days of receipt from 65% to 95% by March 15 – 65% is your baseline number and the rest are goals. If you find yourself at 75% by March 10, you know you’ve got work to do. If you’re at 100% by March 10, you know you’ve exceeded expectations and your automated workflow is working.
Recommendation: Make one person accountable for both defining these metrics and measuring them over time.
Why Bother Tracking AP Metrics?
If you don’t track your business process metrics, you will never know how productive you are, have become or can be. Decisions will be made on “gut feel” instead of data. Additionally, the investment made on workflow automation may actually be very profitable. However, unless there is evidence of this, there may be doubt of its effectiveness and a temptation to pull the plug for those whose gut feel and/or internal agenda tells them otherwise.
In this way, measuring and analyzing business process metrics is as important as implementing workflow automation itself. Doing both will help ensure that your organization achieves your goals, such as lowering costs, improving service quality and increasing efficiency—as in our AP workflow example.
Want a play-by-play on what automating your AP department will be like? Download our free guide to the workflow automation process.