Accounts Payable: Benchmarking your KPIs
Do a quick litmus test on your current Accounts Payable (AP) processes:
- How many FTEs in Accounts Payable?
- How many invoices do you process per annum?
This provides you with the number of invoices processed per FTE per annum.
According to analysts, high performing AP departments outperform all others and process 27,097 invoices per FTE, per annum (APQC). More optimistic surveys even suggest 42,000 invoices per FTE, per annum (Hackett Group). That’s quite a difference and statistics should be taken with a ‘pinch of salt’. But they do act as a good basis for discussion.
At Proactis, we see high performing organisations process in excess of 40,000 invoices per FTE per annum and top performance in excess of 90,000 invoices.
However, there is a wide variation in AP invoice processing efficiency according to sector, size of business, invoice profile and technology utilisation e.g. the cost to process an invoice is significantly higher in sectors with a high percentage of non-stock trade vs. stock trade; and best-in-class operations are nearly 60% more likely to have standardised invoice receipt and workflow processes as part of their AP function.
Yet, even the worst-performing AP departments don't seem to realise how far they lag behind their peers. In fact, organisations with good scores are more willing to see further improvement opportunities.