3 Real-world Steps for Improving AP Efficiency

As back-office processes like accounts payable are evolving to become more of a value driver in a data-driven world, a sluggish accounts payable process is a serious handicap for any business. Whether you are just getting started in a new business or looking to enhance an aging process, this post will help you think about how to create a more efficient AP process. 

3 Real-world Steps for Improving AP Efficiency 

1. Measure AP Efficiency 

Your accounts payable process is sluggish, here’s how you fix it. Start by measuring your current accounts payables efficiency. Knowing the metrics below will help you identify bottlenecks in your process and improve faster. 

• Average Time Per Invoice - In addition to tracking the total time for invoice, track the time per invoice at each step in the AP process. 
• Cost Per Invoice - This is a key metric for obvious reasons. Checkout how it breaks down here.  
• Number of Invoices Processed by Each Employee - This step is not just about seeing who can process an invoice the fastest, but to identify bottlenecks in your process to make your team's job easier. 
• Exceptions Per Month - What percentage of total invoices are flagged for exceptions?  
• Number of Steps in Your AP Process - This is a critical metric for identifying and reducing redundancies 

Learn more about each of these metrics in this post: What are the KPIs in Accounts Payable and How to Improve Them 

2. Rethink Your Automation

Whether you have manual processes, an aging automation solution or just the out-of-box functionality of your general accounting software, if your AP process is sluggish, it’s time to rethink your automation. Does your current process lack fully managed data capture, exception-based workflows, or flexible options for fulfillment? Imagine how much easier your life would be if your payments just worked. Getting the most out of automation may require investing in a new solution. When choosing automation consider these top factors: 

• Ease of Use 
• Accounting Software & ERP Integrations 
• Price vs. Value 
• Support & Service 
• Fraud Prevention 

Further Reading for Dynamics GP Users: How to Streamline Invoice Processing | Dynamics GP AP Workflow

3. ACH and Payments Automation

Automated Clearing House (ACH) payments have become the preferred method for AP departments to pay invoices. ACH is a win-win for you and your vendors because vendors get paid faster, with no transaction fees and you get one more degree of automation with the simplicity and security of ACH. 

Related: Paying Vendors with ACH 

Accounts Payable as a Service 

Accounts Payable as a Service (APaaS) includes robust AP automation software and services. With APaaS there is no more busy work in AP processing, and businesses achieve more efficiency in their accounting department while internal accounting teams and systems maintain control.  

Learn More about Accounts Payable as a Service (APaaS)