Every transaction matters – yet, are we using the full potential of data analytics in our accounts payable processes? While the importance of timely payments and accurate record-keeping is widely acknowledged, the utilisation of data analytics to drive insights and optimisations is sometimes overlooked.
By focusing on key data points, businesses can identify trends, detect inconsistencies, and make informed decisions to optimise their accounts payable operations. In this article, we’ll explore some of the most important data analytics to consider in accounts payable and how they can drive success for your business.
5 Data Analytics Metrics To Drive Success In Accounts Payable
1. Invoice processing time
One of the key data analytics metrics to monitor in accounts payable is the time it takes to process invoices. By tracking the average processing time from receipt to payment, businesses can identify bottlenecks in their workflow and implement measures to streamline the process. Faster processing times not only improve vendor relationships but also enable better cash flow management and financial forecasting.
2. Invoice approval rates
Monitoring invoice approval rates can also provide valuable insights into the efficiency of your accounts payable workflow. It is important for businesses to track the percentage of invoices approved on the first pass versus those that require multiple rounds of review. Then, they can identify opportunities to maximise their approval processes and minimise delays. Improving approval rates accelerates payment cycles and reduces the risk of late fees and penalties.
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3. Early payment discounts captured
Another key data analytics metric to consider is early payment discounts. Early payment discounts can represent significant savings for businesses. However, capturing them at the right time requires proactive management of accounts payable. Businesses can keep track of the percentage of early payment discounts captured against those that were missed. This gives greater insight into their effectiveness in catching these opportunities. Taking a look into discount capture rates can help businesses manage their payment schedules to maximise savings and improve vendor relationships.
4. Duplicate payments detected
Duplicate payments are a common source of financial loss for businesses. They can result from errors in invoice processing or data entry within accounts payable processes. Businesses can identify patterns and root causes of duplicate payments and implement controls by monitoring the number of duplicate payments detected over a specific period. In the long run, measuring this data analytics metric helps preserve cash flow and works positively towards compliance efforts.
5. Vendor performance metrics
Analysing vendor performance metrics, such as on-time payment percentage, invoice accuracy, and dispute resolution time, can provide valuable insights into vendor relationships and service quality in accounts payable optimisation. Businesses can identify top-performing vendors and address issues with underperforming ones. Improving vendor performance fosters stronger partnerships and operational efficiency.
Conclusion
Data is king in the world of finance. It drives business success in accounts payable operations, and its success rate can only be measured with KPIs. Invoice processing time, approval rates, early payment discounts captured, duplicate payments detected, and vendor performance are a few key data analytics metrics to take note of. Finally, it’s important to analyse and interpret the data so that businesses can act accordingly to meet their goals.
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About B2BE
B2BE delivers electronic supply chain solutions globally, helping organisations to better manage their supply chain processes, providing greater levels of visibility, auditability and control. We’re driven by a passion for what we do, inspired by innovation, and underpinned by a wealth of knowledge. With over 20+ years of experience, the B2BE teams operate worldwide.
For more information, visit www.b2be.com.