"Hey, we're not doing so badly" in Accounts Payable productivity

"Hey, we're not doing so badly," was the exclamation of a famous soccer president to some of his detractors. That's right, we're not so bad, is our conclusion after looking at the results of the study conducted by mineraltree, a renowned American software solutions company for accounts payable automation.

The mineraltree study, conducted between September and October 2016, involved 152 American companies and yielded interesting results.

To support our assertion that "we are not doing so badly," in this article we will compare the results of the mineraltree study with those of the study conducted by easyap with Spanish companies during the second quarter of 2016, as well as with those of the study conducted by easyap among its customers.

1.- Application of productivity metrics in Accounts Payable

In an activity such as processing supplier invoices, which is so dependent on manual labor and therefore has a high cost, it is essential to use metrics that can be compared periodically to track progress and thus verify whether the measures implemented are appropriate. If these metrics are also standard, we can also compare our productivity with that of similar companies. The standard metric par excellence for measuring the productivity of an Accounts Payable department is the Processing Cost per Supplier Invoice.

When asked, do you know how much it costs your organization to process a supplier invoice, including personnel costs, indirect costs, hardware and software costs, and/or depreciation, etc.?

1. Sixty-nine percent of respondents answered yes, they were aware of this information. It is significant, however, to note that when asked the same question a year earlier, only 25% answered yes. This suggests an increase in awareness due to the control of a significant source of costs, such as those generated by the Accounts Payable department. Accounts Payable department .
   
2. In the case of the study conducted in Spain by easyap, only 39% of companies acknowledge being aware of the cost of processing supplier invoices.
3. Finally, in the case of esayap customers, 100% of customers knew their cost per invoice. Easyap bills them a price for each invoice processed, to which only the direct and indirect costs of the person, in some cases two, directly attributable to the activity, need to be added.

2.- Processing cost per supplier invoice

1. The study by Mineraltree shows that 45% of respondents incur less than $5 in costs per supplier invoice, 73% incur less than $10 (23% more than the previous year), while the poor results are: 13% incur costs between $11 and $15, and 14% incur $15+ per invoice.
   
2. In the case of the study among Spanish companies conducted by easyap, 36% of respondents say they have a cost per invoice of less than €7, 53% between €7 and €12, and finally, 11% with a cost of more than €12.
3. With regard to easyap customers, 42% say they pay less than €3.50 per bill, and the remaining 58% pay less than €4.80.

Easyap has launched a tool for companies concerned with cost containment that makes it easier to calculate the cost of processing supplier invoices. To access the supplier invoice processing cost calculator, click here.

3.- Individuals involved in the processing of supplier invoices

The number of people an invoice passes through during the process is also an important indicator. Undoubtedly, the more people involved in processing, the more people who touch an invoice, the higher the error rates, the longer it takes for a supplier to receive payment, and the more likely an invoice is to get lost in the process.

1. In mineraltree's study of the American market, nearly 60% of respondents said that each of their invoices is "touched" by two or three people from the moment of receipt to payment, while 33% said it was between four and five people.
2. In the case of the study conducted by easyap in Spain, 26% of participants stated that each invoice passed through between one and three people, while the rest (74%) involved four or more people.
3. 100% of easyap customers, meanwhile, state that no one in their organization physically touches an invoice, as the entire process, from receipt to accounting and payment, is electronic.

Technology continues to evolve at an exceptional pace. These new technologies and Accounts Payable Outsourcing companies are transforming traditional Accounts Payable Departments from cost centers to revenue generators. At easyap, we are aware of the need to contain costs in our clients' Accounts Payable area while maintaining high standards of quality, security, and solvency. If you would like us to tell you how we do it, please contact us.