Setting accounts payable goals can help organizations drive improvement and efficiencies. Effective goal setting can also motivate employees. Without goals it is challenging to make quantitative improvements to the parts of the business that have an administrative versus a revenue generating focus. Creating these goals can be challenging for some departments, including accounts payable. Here are a few examples of accounts payable goals that may be worth tracking for your organization.
Vendor Payment Processing Time
How long does it take for the accounts payable team to process a vendor payment? This is important for several reasons, not the least to keep your vendors happy and current. We have seen situations where late payment has lead to a vendor stopping providing their product or service.
Discounts Captured vs Discounts Offered
If your company takes advantage of quick pay opportunities, it is important to understand if you are capable of processing invoice in that window. As an example, a 2% discount for 10 days can be worth 37% from an annualized perspective. This is a direct return on investment for the accounts payable team.
AP Transactions per Employee
This target will help with the productivity of your team. It can help with future planning around your business cycles and as your company grows. As you grow your suppliers and as the business grows, it can help on future staff hiring planning.
Cost per Invoice Processed
This not only takes into account the labour cost of the team, but also could include other items like the cost of the accounts payable. Looking at a combined cost can help as you explore ways to improve the cost per invoice.
Invoice Errors and Exceptions
Tracking the number of errors and exceptions can point out to broken processes and systems. These can cost your business extra effort and lead directly to added costs. In many cases, the errors are from your suppliers, but are not caught or caught quickly.
If you would like to understand how OnePosting can help your organization make their accounts payable goals, book a meeting.