What are the most important KPIs for measuring invoice processing automation success?

Processing Time: Measure the time taken from receipt of an invoice to its processing and approval. Accuracy Rate: Assess the accuracy of invoice data extraction and processing to minimize errors and discrepancies. Cost Reduction: Evaluate the cost savings achieved through automation in terms of reduced manual effort and processing expenses. Cycle Time: Monitor the overall cycle time for invoice processing, including approval and payment, to ensure efficiency. Compliance Rate: Ensure compliance with regulatory requirements and internal policies throughout the invoice processing workflow.

1. Automation of invoice processing speeds up the payment period, which is a crucial KPI. 2. Improved cash flow, avoiding late fees, and taking advantage of early payment reductions are all made possible by faster processing. 3. Automation tools efficiently capture, validate, and route bills. 4. Integration with ERP or accounting software further simplifies the procedure. 5. In general, quicker invoice processing improves financial agility and efficiency.

Average Industry Metrics varies for manual effort by region : (Data capture + Exceptions in ERP) Asia / India 14 ~ 15 invoices per hour Asia / China 25 ~ 30 invoices per hour Asia / PHI 14 ~ 15 invoices per hour US - 3 ~ 7 invoices per hour By System : Hyper - 50 ~ 75 invoices per hour (E2E)

Shorter processing times indicate efficiency, measure the time taken from invoice receipt to payment. Don't forget besides efficiency, speed can help with stakeholder's satisfaction. Gather feedback from vendors on the automation process. Positive feedback reflects successful implementation

Once you have deployed the invoice processing automation and sailed successfully through the Hypercare period, it's time to focus on the KPI data collection. I believe the KPIs should be categorized into Output-based (Tactical) and Outcome-based (Strategic). The Output-based KPIs, like - Invoice Processing Time - Accuracy - Exceptions passed on to human - Overall Cycle Time are important and help to improve on cost and productivity. However, we should focus on and measure the Outcome-based KPIs as that's the end result and objective of the invoice processing automation. These Outcome-based KPIs could be - - Cash flow impact - DPO impact - Improvement in STP% - Reduction in the total cost of the AP Department - Vendor/ Supplier CSAT

Throughout my career, I've observed that manual invoice processing can be quite costly due to labor, errors, and inefficiencies. Utilizing automation tools helps eliminate these costs by reducing manual data entry and speeding up the entire process. This shift not only lowers operational costs but also scales with your business as it grows, demonstrating a clear return on investment.

Average costing of Invoice without any ERP License / Access costs : Capture + P2P Exception + Posting to ERP 0 Paper , All PDF invoice = 0.9 ~ 1.3 USD per invoice + 0.15 $ for cloud for hosting Scanned Paper + OCR + Human N-Key All PDF invoice = 1.4 ~ 1.9 USD per invoice + 0.21 $ for cloud for hosting (Includes Sigma QA teams as head cost)

Straight-through processing (STP) rate: STP rate measures the percentage of invoices that can be processed without human intervention. Higher STP rates indicate successful automation. Invoice cycle time: This KPI measures the time it takes from invoice receipt to payment. Automation should reduce the invoice cycle time, improving cash flow and operational efficiency. Exception handling rate: This KPI measures the number of invoices that require manual intervention or exception handling. Automation should minimize exceptions, reducing the need for manual intervention.

on Electronic PDF - Without RPA and 0 down OCR : 99.99 % Rate of recognition + 99.XX % accuracy. 0 Touch will be at least above 70% Else its 40 ~ 60 % Rate of recognition on OCR n-Key most, 0 Touch process is less than 3 %

Accuracy in invoice processing is critical to avoid financial discrepancies and maintain compliance. From my extensive background in working with AP and AR, I've seen that automated solutions significantly enhance accuracy. These systems use advanced technologies to ensure that every invoice is processed correctly, minimizing the risk of overpayments or fraud and ensuring robust audit trails.

Track the percentage of invoices with errors (e.g., incorrect data, missing approvals). Lower error rates signify effective automation. Less errors mean less overhead and reprocessing time and costs. When designing the automation, consider how can you enhance reconciliation, this will in turn help compliance efforts.

Typical exceptions include : Supplier KYC PO GRN QTY + Unit Price Duplicate End of Month Discounts Credit note NPO Approvals e-Invoicing will bring in more exception process and is not added here

Handling exceptions effectively is crucial to maintaining a streamlined invoice process. In my experience, automating this aspect using predefined rules for common discrepancies can drastically reduce the need for manual intervention. This not only frees up valuable resources to focus on more strategic activities but also enhances the overall efficiency of the financial operations.

Caution : Eliminate RPA if you are a customer. RPA is a Trap by BPO companies in the wrong side of Digital Transformation. Automate at your workflow level. It cuts your OPEX by 20 ~ 45 % on outsourcing.

Having a transparent view of invoice processing is essential for making informed decisions. Throughout my years in the field, I've leveraged tools that provide comprehensive insights into the invoicing process. These tools offer real-time data and analytics, helping businesses monitor performance and make strategic adjustments promptly, which is essential for effective working capital management.

Improving stakeholder satisfaction with the invoice processing system is a critical component of business relationships. From my experience, providing user-friendly automation solutions that offer self-service options and robust feedback mechanisms can significantly enhance user engagement and satisfaction. This not only improves internal efficiency but also strengthens supplier relationships.

Supplier satisfaction: This KPI measures the satisfaction level of suppliers with the invoice processing system. Automation should improve supplier satisfaction by providing faster and more accurate processing.

Measure the reduction in the total cycle time from invoice receipt to payment. We achieved a 40% reduction in cycle time by automating the approval workflow and integrating it with our ERP system. This KPI reflects the overall efficiency gain from automation, highlighting the time saved in processing each invoice. Monitoring this metric helped us identify additional areas for optimisation, such as streamlining exception handling procedures. Track the percentage of invoices that fall out of the automated process and require manual intervention. Initially, our exception rate was high at 20% due to various validation issues. By analysing the root causes and implementing rule-based adjustments, we reduced the exception rate to 5%.

Resource utilization: This KPI measures the efficiency of resource allocation for invoice processing. Automation should optimize resource utilization by reducing manual effort and reallocating resources to more value-added tasks. By tracking these KPIs, organizations can assess the success of their invoice processing automation initiatives and identify areas for improvement.