For some companies, processing accounts payable is a time-consuming, detail-intensive and error-prone function. For others, it’s a quick and easy task. Companies that take a holistic view of process benchmarks develop a rich baseline of data to help improve their finance operations, including their Accounts Payable (AP) processing.
The American Productivity Quality Center (APQC) has a benchmarking database that considers the total cost to process accounts payable (AP), per invoice processed. Per AQPC, the total cost of AP covers processing payments of operating expenses and other supplier charges, including the development of policies and procedures around the processing of accounts payable and all operations. The total cost to process accounts payable includes labor, systems, outsourcing, overhead, and other AP process costs. This metric is calculated by dividing the total cost to process AP by the total number of invoices processed by the business entity.
According to its data, of the 1,485 reporting organizations, Laggards — the bottom 25% — are spending $10 or more per invoice processed. Leaders — the best performers (the top 25%) can do the same task at a cost of $2.07 per invoice or less — nearly 5x less than the organizations in the bottom quartile.
Many of best performers have invested in technology to automate AP. Such industries often feature more mature process approaches, with more advanced use of collaboration and automation, according to APQC.
How can you improve your AP costs?
- Set an annual goal to improve the processing of invoices
- Learn from your competition and from companies outside your industry
- Leverage automation to reduce time/labor in your AP processing