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Improve AP Performance BY MAKING KPIs COUNT 5/5

WrongPercentage of Duplicate/ Erroneous Payments

Payment errors—missed discounts, overpayments, duplicate payments, etc—can be quite common in the AP process, especially when the organization is dealing with paper invoices and check payments. Understanding what percentage of payments has an associated error—by looking through historical transactions—and identifying the cause of those errors—is essential for helping to reduce those erroneous payments.

If an organization does not have the internal resources to go through historical transactions to identify payment issues, a number of third-party audit firms can provide this service. After an audit has been done and payment errors identified, it is important to monitor payment transactions on an ongoing basis to ensure that the errors are not repeated. Many audit firms license technology solutions that can perform checks against payments before they are made, and a number of electronic invoicing and payments solutions deliver the same functionality as well.

These are just a few metrics to keep in mind. Of course, the metrics an AP department tracks depend on its industry, size, processes, and a number of other factors. It should be noted that measuring performance against another organization is not always effective because each organization may measure and report metrics differently. It is generally more valuable to measure within your own organization—tracking metrics on a periodic basis and looking for areas to improve going forward. ??

Leon Busch is the Division Vice President and General Manager of ADP’s Procure-to-Pay division. He has a long history in the AP industry, with roles at SourceNet Solutions, Bank of New York Mellon, and Argus Financial Software prior to joining ADP.

 

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This article was orginally posted on Paytech.com in January 2015

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