8 Key accounts payable metrics to track in 2023

Any metrics that are related to the internal operations of the business and accounts payable fall under AP operational metrics. This can include things like your departments, employees, and the processes you set up to make payments.



All metrics that are linked to the actual financial transactions that are happening to process accounts payable fall under the AP financial metrics. Any kind of fees, payments, discounts, and errors related to AP payments are part of this category.



Metrics that are connected with your vendors or suppliers fall under accounts payable supplier metrics. Aspects related to how well they fit within your AP system and vice versa are included in this category. 

Vendors and suppliers often provide discounts for early payments, advanced payments, or full payments made using a particular payment method. You can take advantage of this to cut costs significantly over a period of time.

Track all the discounts that you currently get. Track the discounts that you could be getting but are not able to benefit from due to issues like paying vendors only on the due date instead of early payments.

In such cases, setting up automation systems that help you process invoices faster can do the trick. 

For suppliers who don’t give you early payment discounts, start building better relationships with them so that they give you the option to do so.

Apart from this, you must also measure the number of complaints or if your vendors are facing any discrepancies in receiving payments from you.

Tracking and rectifying all these problems can build a better relationship with them and lead to trust and loyalty. If manually doing this is not feasible, then you can implement an automated response system to keep track of queries and concerns.

Measuring the time taken by an AP employee to process invoices every month is an accounts payable productivity metric that helps you identify which employee is performing efficiently and who is not.

Doing this will give you an idea about the employees who might need to be trained again or help them fix certain steps in their AP process to enhance their performance.

If the processes turn out to be the problem, then the implementation of an AP automation tool to help each employee improve their invoice processing speed and decrease errors is a great option.

The payment cycle time that you have with different vendors is one of the accounts payable metrics that can impact your workflow and cash flow.

If there is an overlap between when you need to process AP and when you receive money, then the process can be very chaotic.

An even dire situation is when each month you have to process accounts payable before your accounts receivable. It might cause a cash flow problem.

A workaround to this is to negotiate with your vendors and suppliers to adjust payment cycle times to when it is most beneficial to both parties involved. 

Duplicate payments are definitely one of the most serious problems faced by any accounts payable team at a company.

The lack of proper processes devoid of matching systems can let duplicate invoices pass through without being noticed costing a lot of money to your business.

To rectify this, stricter processes are definitely needed, but humans can always tend to make errors.

So using an AP automation tool that provides 2-way and 3-way invoice matching can help you detect duplicate invoices more accurately and prevent fraud or duplicate payments.

DPO is a KPI of accounts payable that tells you the average time it takes for your AP department to process all bills and invoices.

Days payable outstanding is a financial ratio that is calculated using the following formula = Accounts Payable / (Cost of Sales / Number of Days).

The lower the number is the better it can be considered if your goal is to process AP payments as fast as possible to get the early payment discounts and reduce overall costs in AP.



Invoice exceptions refer to faulty invoices either due to incorrect values such as the amount due, product details, quantity delivered, etc.

When an AP employee is manually processing all invoices, getting stuck at a faulty invoice can stop the entire process and suck away their precious time by them having to seek out respective team members to rectify the issue.

To make this a non-issue, your business can implement software that helps detect such errors much faster through automation so that other invoices can be processed while errors are forwarded to the relevant employee for clarification and rectification.

The percentage of invoices that are processed immediately and efficiently without any hiccups can give you an idea about the effectiveness of the AP process that you have set in place.

A higher percentage of straight-through invoices indicates that the processes and systems you have set in place are effective and also that suppliers and vendors tend to send you accurate invoices without any errors. 

Any form of manual work such as inputting data from invoices into a system for further processing is drastically improved in quality thanks to an automation system's ability to capture data more accurately.

AP automation systems use a technology called optical character recognition (OCR) that scans a document, automatically reads relevant information and inputs them in necessary fields to process a payment. This improves quality of data entry. 

Input timeliness refers to the speed at which incoming invoices are processed for payment. When invoices are to be processed manually, the payment cycle tends to be pretty long.

Using automation software can reduce the time it takes to process invoices by a significant amount.

Because an AP automation system can work on multiple invoices at once compared to a human who has to go through each invoice one at a time, the payment cycle time is reduced and your vendors receive their payments much faster.



Accounts payable automation also plays a major role in enhancing the quality of the process you follow for paying invoices. Right from receiving an invoice to finally entering the payment data in your accounting tool.

The quality improvements in the process are brought in the form of accuracy, speed, and the ability for team members to collaborate easily using a central platform.

Instead of having communication scattered across email threads and messages on different channels. All these small improvements in different stages of processing an invoice make a huge difference to the system that you follow.

The whole point of automation is to improve speed. The best part is that this speed never comes at the cost of quality.

This is because AP automation systems are equipped with error detection and fraud prevention mechanisms that help flag anomalies and let the AP employee resolve them quicker than usual.

An increase in the speed of processing accounts payable ultimately affects your vendor relationships in a positive way.

Related read- Automated invoice processing to better manage cash flow



When the input speed and quality are enhanced, the output speed and quality also improve.

Vendors receive faster payments that build trust between both businesses and a sense of loyalty is developed to provide the best quality goods and services to each other.

Output in terms of detecting errors and resolving them quickly is also improved as there is more time to rectify compared to a manual system.