What metrics should you track when processing invoices?

1 Invoice processing time

Invoice processing time is the average number of days it takes to process an invoice from receipt to payment. It reflects how fast and accurate your invoice processing system is, and how well you manage your accounts payable. A lower invoice processing time means you can take advantage of early payment discounts, avoid late payment penalties, and free up cash for other purposes. To reduce your invoice processing time, you can automate your invoice capture, validation, approval, and payment processes, and eliminate manual errors and delays.

2 Invoice processing cost

Invoice processing cost is the total amount of money it costs to process an invoice, including labor, overhead, materials, and technology. It indicates how efficient and economical your invoice processing system is, and how much you can save by optimizing it. A lower invoice processing cost means you can increase your profit margin, allocate more resources to other areas, and invest in better technology. To reduce your invoice processing cost, you can streamline your invoice workflow, eliminate unnecessary steps, and leverage cloud-based software and services.

3 Invoice exception rate

Invoice exception rate is the percentage of invoices that require manual intervention or correction due to errors, discrepancies, or disputes. It shows how reliable and consistent your invoice processing system is, and how well you manage your vendor relationships. A lower invoice exception rate means you can reduce your invoice processing time and cost, improve your data quality and accuracy, and enhance your customer satisfaction and loyalty. To reduce your invoice exception rate, you can implement invoice matching, reconciliation, and dispute resolution processes, and communicate clearly and regularly with your vendors.

4 Invoice accuracy rate

Invoice accuracy rate is the percentage of invoices that are processed correctly and without errors. It measures how precise and trustworthy your invoice processing system is, and how well you comply with your cost accounting standards and best practices. A higher invoice accuracy rate means you can avoid overpayments, underpayments, fraud, and audit risks, and improve your financial reporting and decision making. To increase your invoice accuracy rate, you can verify your invoice data, enforce your invoice policies and rules, and audit your invoice processes.

5 Invoice payment rate

Invoice payment rate is the percentage of invoices that are paid on time and in full. It reflects how timely and compliant your invoice processing system is, and how well you manage your cash flow and working capital. A higher invoice payment rate means you can improve your credit score, reputation, and bargaining power, and avoid interest charges, penalties, and legal actions. To increase your invoice payment rate, you can forecast your cash flow, prioritize your payments, and negotiate favorable payment terms with your vendors.

6 Invoice automation rate

Invoice automation rate is the percentage of invoices that are processed without human intervention. It indicates how advanced and scalable your invoice processing system is, and how well you leverage technology to improve your productivity and performance. A higher invoice automation rate means you can reduce your invoice processing time and cost, increase your invoice accuracy and consistency, and free up your staff for more strategic and value-added tasks. To increase your invoice automation rate, you can adopt invoice automation software and solutions, and integrate them with your existing systems and platforms.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?