Accounts Payable: Benchmarking your KPIs

Do a quick litmus test on your current Accounts Payable (AP) processes:

  • How many FTEs in Accounts Payable?
  • How many invoices do you process per annum?

This provides you with the number of invoices processed per FTE per annum.

According to analysts, high performing AP departments outperform all others and process 27,097 invoices per FTE, per annum (APQC). More optimistic surveys even suggest 42,000 invoices per FTE, per annum (Hackett Group). That’s quite a difference and statistics should be taken with a ‘pinch of salt’. But they do act as a good basis for discussion. 

At Proactis, we see high performing organisations process in excess of 40,000 invoices per FTE per annum and top performance in excess of 90,000 invoices.

However, there is a wide variation in AP invoice processing efficiency according to sector, size of business, invoice profile and technology utilisation e.g. the cost to process an invoice is significantly higher in sectors with a high percentage of non-stock trade vs. stock trade; and best-in-class operations are nearly 60% more likely to have standardised invoice receipt and workflow processes as part of their AP function. 

Yet, even the worst-performing AP departments don’t seem to realise how far they lag behind their peers. In fact, organisations with good scores are more willing to see further improvement opportunities.

Now find out:

  • What percentage of invoices are received in electronic form (OCR, EDI, XML, PDF, Excel, Self-billing, PO-Flip, PCards etc.)? 
  • The percentage of time spent in process (checking of invoices, data entry, PO matching, approval workflow & release for payment)
  • The profile of invoices (PO/non-PO, stock/non-stock) and how they are dealt with etc.

This will provide you with a good idea of how much administration is required to deal with paper and problematic invoices plus savings already achieved from straight through processing (STP).

However, when asking these questions take caution of the context to the replies e.g. are electronic invoices received straight-to-process or do you receive PD’s/emails that need to be opened, detached and re-keyed? This could skew your results and thinking. 

According to a Forrester Consulting survey, some of the key issues companies are looking to address include:

  • Inadequate technology: A significant minority of AP departments live without basic applications that others use to streamline their processes. Of our respondents, 47% get more than half their invoices in paper form, 26% match them with physical POs and other supporting records, and 42% insist on physical signatures to evidence approval. All these manual paper-handling tasks increase costs, delay processing, and increase errors. 
  • Poor purchasing discipline: Even AP clerks manually processing invoices can do far more than 5,000 a year if the invoices match supporting records. The most time-consuming invoices are those where the business hasn’t raised a PO or has got the price wrong.
  • Complex invoice categories: Not everything fits the “PO, receipt, invoice” sequence. Businesses that buy a lot of services face extra manual verification effort. Many finance functions create extra work for procurement by insisting on after-the-fact POs so they can still do a three-way match – this keeps the finance system happy but delays processing without noticeably improving control.

Combining electronic invoicing with eProcurement makes success twice as likely. Persuading suppliers to send invoice electronically cuts manual data capture tasks, such as document scanning and data entry. Even without that, the use of eProcurement reduces discrepancies and hence the clerical time wasted on resolving them. Together these two process improvements combine to maximise straight-through processing (STP), where the system approves invoices for payment without any human intervention.

In summary, analysts state that organisations with standardised invoice receipt and workflow processes:

  • Reduced their invoice cycle time by 51%.
  • Rated their visibility into invoice receipt and workflow status at a 30% higher level.
  • Lowered their invoice-processing costs by 12%.

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Quite simply, it is a review of your Accounts Payable historical data for the purpose of identifying and recovering funds paid to your vendors and suppliers resulting from overpayments and under-deductions. The reasons for these erroneous payments are numerous and areas of recovery can include duplicate or wrong payments, open/unapplied supplier credits, unrecorded accruals/rebates/allowances, contract/purchase order terms compliance, pricing errors, missed discounts, unaccounted returns, transportation overcharges, escheatment avoidance, among other areas.


Most organizations have great controls, people, and systems in place. However, in this complex environment, no system or individuals operating within the procure-to-payment cycle are 100% error-free. Every system has vulnerabilities through the circumvention of established controls and communications failures between buyers and sellers.

The relationship that exists between suppliers, procurement, receiving, and accounts payable is effective most of the time, but not all of the time. Although systems are designed for accurate and efficient payment of invoices, a percentage of leakage will always occur.  These overpayments can easily add up to a significant amount and if not captured, will represent pure lost profit to your company’s bottom line.


To engage in an Accounts Payable Recovery Audit should be a simple, unintrusive process, where the majority of the audit can be conducted off-premise, requiring minimal involvement of your Accounts Payable and company staff.

The review is a historical look at supplier spend, combined with a comprehensive audit process. It begins with the collection of data which typically requires a simple transmission of specific files without any need for special programming.

The data gets normalized and run through proprietary software to identify the potential overpayments. Auditors review and validate the data to identify recoveries for submission to suppliers for credits.

There is no risk to engage in the review because it is a 100% contingency-based fee. There is no cost until you receive an economic benefit for each recovery, in the form of a deduction from payment, or receipt of a check from the respective supplier.


Each audit will identify, and capture lost profits due to errors within your organization’s procure-to-payment environment. Recoveries from your suppliers can vary based on numerous factors, however, on average, you can expect recoveries to be approximately .1% or $1 million for each $1 billion in annual revenue. Additionally, each audit will provide your internal audit team with the identification of systemic or procedural weaknesses and, make recommendations for business process improvements to mitigate future risks.


There really is none. The Accounts Payable Recovery Audit is a 100% contingency-based fee and should require minimal client staff time to support the review. It is a collaborative process that maintains the confidentiality of sensitive information and utmost respect for your supplier relationships.


In the continuously advancing world of technology and automation, there are inherent risks.  There are many areas within the procurement to payment transactional cycle that undergo complete conversions, upgrades, and the introduction of new technologies. These improvements are advancing the goal of increased efficiencies, but often create vulnerabilities.

Revenue growth for many companies occurs through acquisitions and mergers.  The process of integrating or “on-boarding” the acquired company increases the risk of duplicate and other forms of overpayments. A Procurement to Payment Recovery Audit of the acquired company data prior to on-boarding or “sunsetting” of the system, and the period immediately following the transition to a shared system, is highly recommended.


It is universally understood that the majority of organizations are constantly challenged with time constraints to take on additional projects.  It is a common misunderstanding that engaging in an Accounts Payable Recovery Audit can be time-consuming. When delivered properly, a professional recovery audit firm will manage the entire scope of the project, with minimal time requirements of client staff.

While the total amount of recoveries are unknown, and the root causes of these recoveries are unknown, what is known is that delaying an Accounts Payable Recovery Audit can result in a significant amount of supplier overpayments and under deductions from going unrecovered.

A postponement of 6 months creates both a potential loss of overpayments for that period, as well as the root cause of those overpayments and under deductions going unrecognized, uncontrolled and continuing to leak funds.  All too often a single transaction, or series of transactions that represented hundreds of thousands of dollars, are left sitting in a supplier’s account rather than in your organization’s bottom line.

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