Slowly, but gradually more and more businesses have started to use automated account payable solutions in their AP department. This has led to frequent electronic payments, which saves the company a lot of time and money. However, due to the shift of AP processing many companies are at a loss on how to track the department’s progress, with the absence of a tracking metric, it is near impossible to make necessary improvements.
As a way to ensure the company continues to grow and save money, here are the best KPIs to monitor to see how the department is doing with the new automated system in place:
KPI #1: Overdue Invoice Percentage
Businesses who have stuck to the manual invoice processing often find themselves dealing with overdue invoices due to the complicated and long approval process. Once the right automated account payable solutions have been implemented, the percentage should decrease over time until overdue invoices become null.
KPI #2: Outstanding Invoices Value
Since there are outstanding invoices moved from the manual system to the automated version, there will be a value that represents all outstanding invoices. This is an important KPI to monitor as this should decrease as more outstanding invoices are paid on time and in full.
KPI #3: Total Percent of E-Payments
Another KPI that will indicate the success of the new system is the percent of all electronic payments that are made each cycle. If the percentage begins to grow as the AP department fully transitions to the automated system, it is a good sign of progress.
KPI #4: Invoice Processing Time
With the automated invoicing system in place, the time it takes to process and approve an invoice should drastically lower. If not, there must be something wrong with the entire system and necessary adjustments should be made immediately.
KPI #5: Average Cost of Invoicing
All financing departments should also keep a close eye on the average amount spent on every invoice the AP department processes. This value should be significantly lower than the cost of processing invoices manually.
KPI #6: Duplicate Payments
A successful and reliable AP system should be able to detect all duplicate payments and prevent them from being processed. If the company has been losing money because of these manual mistakes, the percentage of duplicate payments should be lower than before. The goal is to make zero duplicate payments in the next cycle.
KPI #7: Percentage Of Human Error
Humans can make major mistakes that can cost the company a lot of money. With the new automated invoicing system the percentage of total human errors should be computed. Once the errors have been tracked and identified they can be fixed.
Tracking For Success
KPIs are very helpful when it comes to improving the performance of the department and new automated AP system. The information gathered allows management to spot the weak links in the system and make the necessary changes. Without KPIs, there is very little room for growth and even with the use of an automated invoicing system, success can still be difficult.
Nexus offers account payable solutions perfect for the real estate industry. Check out our website for more info or contact us for a demo.