KPIs and Automation Facilitate Reporting in the Current Economy

Given the fluctuations and uncertainties in our current economy, organizations are looking for actionable ways to improve cash flow and reduce operational costs.

There has been a marked trend toward increased measurement, reporting, and oversight, with automation and artificial intelligence (AI) driving improved financial analysis.

AP Is Being Tasked to Track Performance
One way to ensure maximum efficiency is to track key performance indicators (KPIs). “KPIs assist AP in identifying bottlenecks, improving productivity, and managing cash flow,” reports Pamela Buda M.B.A. APM, Network Accounts Payable Director, St Luke’s University Health Network.

“The ability to gather data and report depends largely on your ERP system. With certain ERP systems, it is easier to gather your data so you can efficiently and effectively measure and report on your KPIs,” she adds.

This important link between automation and KPI reporting was highlighted in a recent survey by IOFM, which found that over half (52%) of AP solutions acquired since 2019 are already slated for replacement signaling the need for emerging technology to power an AP department’s reporting capability.

How Often are AP Systems Replaced?

Source: Signs That It’s Time to Refresh Your AP Technology: Building the Business Case for Updating Your Old AP Tools: https://www.iofm.com/ap/webinars/signs-that-it-s-time-to-refresh-your-ap-technology-building-the-business-case-for-updating-your-old-ap-tools

“In my organization,” says Buda, we are in the process of converting to a new ERP, because reporting is limited with our current ERP system.”

Identifying the Right KPI Measurements
KPIs, to be most effective, need to be measurable, actionable, and aligned with strategic goals. Based on the data collected with KPI measurement, organizations can make key decisions or set goals to improve processes and procedures.

IOFM asked the members of its AP Advisory Panel to identify the KPIs that they find are most helpful for internal process optimization and provide management with optimal insights into cash flow management, efficiency, and supplier relationships.

The following list of KPIs is provided by IOFM Panelist Gaurav Pahwa, Associate Director- Controller, Wingify. The list also notes what the KPIs measure, why they matter, how they can be calculated, and how often they should be reviewed.

Additional KPI Suggestions from Participating Panelists* (See listed in Editor’s Note below for contributors): 

1. Total # and % of invoices
2. Total # of payments
3. Total $ of payments
4. Total straight through (For highly automated organizations. This is for invoices that get posted and are not touched by the AP team)
5. % Straight through vs. not
6. Total PO
7. Total NPO
8. Cycle time (PO and NPO)
9. Number of invoices that are received AFTER the due date –(This is a subcategory of the on-time payments to show the % of invoices that we have absolutely no chance of paying on time, who those vendors are, etc.
10. Support Team Measurement: things monthly like how many tickets come in, are they from vendors or internal users, how many tickets did we close and first contact resolution.
11. Taxes Outstanding (PA Tax withholding)
12. Invoice Queues:
    • New
    • Processed (date range)
    • Waiting Approval
    • Exception
13. Invoice Queues by Team member
    • New
    • Processed (date range)
    • Waiting Approval
    • Exception
14. Received BUT NOT Invoiced at Month-End

Key Trends and Challenges in 2025
IOFM is seeing an increased focus on the value of KPI measurement, and it is anticipated that IOFM’s upcoming 2025 Benchmarking Report will reflect that trend.

It is particularly notable that IOFM’s 2024 Benchmarking Report indicated that four out of 10 respondents either didn’t know their DPOs or didn’t track it. However, in IOFM’s discussions with AP Advisory Panelists, nearly all of the respondents are currently measuring DPO in 2025.

IOFM’s Projections for the Coming Months
With a possible recession in sight, organizations will increasingly:

• Plan for adopting innovative automation to streamline AP operations, improve visibility, provide data insights, eliminate manual work, and speed up processing.
• Work to optimize workflows and negotiate better payment terms with vendors. improve payment terms, reduce disputes, and enhance overall supply chain efficiency.
• Put increasing emphasis on cash flow management, forecasting, and decision making.
• Become more strategic about compliance, internal controls, fraud prevention and cost reduction.

*Editor’s Note: Many thanks to the IOFM Panelists who participated in this KPI discussion, sharing their practices and insights:
Gaurav Pahwa, Associate Director- Controller, Wingify, Pamela Buda M.B.A. APM, Network Accounts Payable Director, St Luke’s University Health Network; Gilda French, APS, APM, CPRS Supervisor, Accounts Payable, VSP Vision, Cynthia A Thompson, APS, Accounts Payable & Payroll Administrator, Morgan Medical Center, Christine Loy, APM | Accounts Payable Manager, Western States Lodging, Melissa Schmear, APM, Accounts Payable Manager, Batteries Plus, Jesse Norwood, APM, Sr. Director, AP & MDM, (Accounts Payable & Master Data Management), Veolia, Christie L. Moseley, Controller, Second Harvest Food Bank of Central Florida, Tammy Hovey-Gearhart | Global Treasury Analyst, ProDriven, Lisa Belanger, APS Accounts Payable Specialist, Connexus; Their individual comments and insights are noted in the following Expert Advice article: Which KPIs Should AP Provide to Management—and How Often? at https://www.iofm.com/ask-the-expert/which-kpis-should-ap-provide-to-management-and-how-often.