3 Ways to Improve Accounts Payable Efficiency | Accounts

What are the steps to improve accounts payable efficiency?

To improve accounts payable efficiency, start by mapping your current processes to identify bottlenecks. Next, implement cloud-based purchase approvals using platforms like Zahara to automate the purchase-to-pay process. Finally, monitor and benchmark key performance metrics such as cost per invoice and invoices per FTE to ensure continuous improvement.

Key Takeaways

Map current processes to identify bottlenecks in AP workflows.
Automate purchase-to-pay processes with cloud-based platforms like Zahara.
Focus on key performance metrics such as cost per invoice and invoices per FTE.
Benchmark performance against similar organizations to identify improvement areas.
Implementing these steps can significantly enhance AP efficiency and accuracy.

Editor's Notes:

Accounts payable teams are under increasing pressure to process invoices faster, reduce costs, and improve supplier relationships. Yet many organisations still rely on manual processes that create delays, approval bottlenecks, and limited visibility into spending. Research from the Institute of Finance & Management (IOFM) found that efficiency remains the biggest challenge for accounts payable departments. Common performance measures include invoices processed per employee, cost per invoice, and on-time supplier payments. Improving these metrics often starts long before an invoice reaches the AP team. By streamlining purchasing processes, automating approvals, and adopting modern purchase-to-pay software, businesses can reduce manual workloads, improve accuracy, and build a more efficient accounts payable function.

Jump to TL;DR

In a recent Benchmark report from the Institute of Finance & Management (IOFM), accounts payable cited efficiency as their biggest challenge.

Based on a 2-year study of nearly 400 AP functions (mainly US-based), the IOFM focused on how benchmarking can help AP leaders to understand how their team is performing and how performance can be improved.

Efficiencies were consistently identified as the biggest challenge to AP teams and were typically measured by metrics such as:

Supplier paid on time
Cost per invoice
Invoices per FTE
Staff per manager

These metrics can be monitored and compared with those of similar organisations to assess how the business is performing and where teams need to focus their efforts to be considered best-in-class.

Diving deeper into the research, the IOFM report shows that process improvement and automation are rated as the highest priorities among respondents. Time management, securing approvals, reducing paper and improving on time payments were also cited as key efficiency challenges for AP leaders.

AP Leaders' Top Concerns

The report highlights the highly manual nature of most AP organisations and points to many of the challenges occuring before an invoice arrives with the AP team.

Upstream Challenges for AP Teams

Looking at upstream problems that impact AP efficiency, it's clear that improving purchasing processes and automation can deliver significant benefits not only to accounts payable but to the organisation as a whole.

Receiving invoices late, lack of receipts, pricing discrepancies, approval audit trails and mismatches are all a function of poor purchasing processes.

There are several solutions that can quickly improve AP efficiency.

3-Step Solution to AP Inefficiencies:

Map Your Processes - take a look at your current workflow, document each step. Start as early in the process as possible, such as a purchase requisition or supplier selection. Identify bottlenecks and opportunities to streamline the process.
Implement Cloud-based Purchase Approvals - automate your purchase-to-pay process using cloud-based platforms, such as Zahara. By implementing easy-to-use, low-cost cloud-based platforms, you will be able to capture powerful performance data while ensuring an efficient process for automating budgets, purchase requisitions, orders, receipts, invoices and approvals.
Monitor, Improve & Benchmark - identify the key performance metrics that you need to focus in on. The IOFM suggest paid on time, cost of invoice, invoices per FTE and staff per manager as quantifiable data to compare with similar businesses. With software in place, such as Zahara, this type of data is readily available and allows management to deliver tangible business benefits, whilst the team optimise efficiencies.

To discuss how you can improve the efficiency of your organisation, please contact Zahara.

Get a copy of the IOFM report here.

Accounts Payable Efficiency: How to Improve AP Performance and Reduce Processing Costs

What are the steps to improve accounts payable efficiency?

Key Takeaways

Editor's Notes:

3-Step Solution to AP Inefficiencies:

TL;DR

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