Accounts payable key performance indicators: From numbers to action
A falling average invoice-processing time can look like progress while older invoices remain stuck in approval. The report describes completed work; the queue reveals what still needs attention.
Useful accounts payable key performance indicators bring those views together. Start with four measures: processing time, approval ageing, exception rate and cost per invoice.
Set the measurement rules
Give each measure a short specification covering its reporting period, invoice population, required dates and exclusions. Keep credit notes separate and document how cancelled records are treated. Where purchase order (PO) and non-PO workflows differ, separate their results before comparing teams or months.
When workflow and ERP records sit in separate systems, check that invoice identifiers match across both. Kefron’s Automation for Oracle Accounts Payable links invoice workflows with Oracle ERP records; teams should confirm which dates and status histories are available for their chosen measures.
Choose calendar days or working days for duration calculations and apply the convention consistently. Use the date the business received each invoice, keeping the supplier’s issue date separate.
Read processing time alongside approval ageing
A practical definition of processing time is receipt-to-posting time. For every approved invoice posted during the reporting month, subtract its business receipt date from its ERP posting date.
Calculate the average by dividing the total elapsed time by the number of invoices. Report the median too: this represents the middle of the sorted durations and helps describe typical completed work when a few long delays pull the average upwards.
Keep payment settlement outside this measure. Waiting for an agreed payment date is different from waiting for coding, authorisation or posting.
When processing time rises, examine those stages individually. The response depends on where work stalls: an AP capacity problem calls for a different action from a departmental approval delay.
Approval ageing supplies the companion view of unfinished work. Take a dated snapshot of invoices awaiting approval and measure their age from first entry into the approval workflow. Preserve that date through reassignment.
Show counts and values in consistent age bands, alongside the responsible approver. Track invoices blocked before approval separately to maintain a complete backlog picture.
In a hypothetical monthly report, median processing time falls from four days to three, while invoices awaiting approval for more than ten days rise from eight to fourteen. The ten-day threshold is chosen for illustration, not as an industry benchmark.
That combination calls for investigation of the growing queue. Where approvals run through Kefron, check for incorrect routing, unavailable approvers and invoices repeatedly returned for missing information.
Count invoices with exceptions
For the invoices posted during the month, count those that encountered at least one defined exception during processing. Divide that count by all invoices posted in the same month, then multiply by 100.
An invoice with both a coding problem and a price discrepancy counts once in the headline exception rate. Record both causes separately for investigation.
Agree what qualifies as an exception: a routine check and a problem requiring corrective work are different events. Otherwise, changes in checking activity can distort the trend. Keep categories stable, then identify which causes account for any increase before assigning corrective work.
Calculate cost per invoice consistently
Divide the month’s invoice-processing costs by the number of invoices posted that month. Include relevant labour costs, software charges, outsourced processing and consistently allocated support costs. Exclude the value of the goods or services purchased.
For employees who split their time between AP and other duties, allocate the relevant share of their cost. Retain the same allocation method across reporting periods.
Read unit cost alongside invoice volume and backlog movement. A month spent resolving difficult older invoices can cost more per posted invoice than one dominated by straightforward work.
If costs rise while the workload remains similar, look for repeated handling and manual intervention before making staffing decisions.
Give each result an owner and an action
Build an internal baseline across several reporting periods before setting targets. Use external benchmarks where their definitions, cost boundaries and invoice mix are comparable to yours.
A weekly approval-queue review is a practical starting point, with more frequent checks where volumes and deadlines warrant them. Assess costs over longer, comparable periods to distinguish trends from short-term fluctuations.
For each adverse result, whether identified through Kefron workflow records or ERP data, record an investigation owner, a next action and a review date. Make the action specific, such as correcting a routing rule or arranging approval cover. At the next review, check whether it cleared the affected invoices and reduced repeat problems.
