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Account Payable?

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  • #24747

    boettler
    Member

    Hello!
           I am currently in the begining of an accounts payable project and I am looking for good metrics. Can anyone recommend any?
    Thanks,
    Rob

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    #59316

    Rose
    Member

    Measures I have seen useful are:
    – total cycle time (from receipt of invoice to payment). Depending on the terms, the cost savings for paying within a specified time could be important but this must be weighed against the value of the funds internally.  We have gained thousands of dollars just by looking at the payment period against the terms and finding money for discounts that were never collected.
    – Match quality is generally an indication of improvement opportunity. Some companies employ three-way match and others a two-way match.  The amount of defects in the match process could be an area to eliminate waste and improve process efficiency/effectiveness.
    – Payment accuracy is the other large area where I have seen opportunities discovered.
     

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    #59318

    Ron
    Member

    Another metric to consider using is interest penalty payments for late payments.   Conversly, you could use the percentage of on time payments as another metric.

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