Unlocking the Power of Accounts Payable Benchmarking

Benchmarking is a pivotal tool for any organization looking to stay competitive and efficient. Jennifer Huffman delves into why benchmarking is especially important in the AP industry, offering a comprehensive guide on how to measure your performance against your peers and competitors. Discover how to leverage these insights to drive meaningful change and continuous improvement within your organization. You’ll understand why benchmarking is essential for assessing your AP performance and identifying areas for improvement and gain practical advice on how to take the results of benchmarking and apply them to enhance your AP process. Jennifer also shares strategies for getting her team on board with benchmarking to foster a culture of continuous improvement.

Jennifer Huffman
Director of Professional Services, Symbeo

Jen Huffman is Director of Professional Services at Symbeo, where she brings over 20 years of real-world expertise in Accounts Payable to help organizations achieve operational success through AP automation and process optimization. Her career path includes roles as Senior Manager, Procure to Pay, and Senior Manager, Global Process Owner at UPMC and Evoqua Water Technologies. She holds an MBA with a certificate in Business Analytics from Robert Morris University and a Bachelor’s Degree in Accounting. Jen is also an active member of IOFM, where  she has earned her APM and Solution Consultant certifications. She also serves as the Secretary of the IOFM Central Atlantic Chapter and is a long-time IOFM Advisory Panelist.

Grace Chlosta
Content Manager, IOFM

Grace Chlosta joined the Institute of Finance & Management (IOFM) in 2022 in a new role for the team as the Content Manager. She is responsible for the planning, organization, development, and implementation of all the content for IOFM’s digital products and (virtual and in-person) events. Grace is committed to ensuring that IOFM’s content stays timely, relevant, and actionable for all financial operations professionals, and works closely with a team of content developers, industry leaders, and subject matter experts to guarantee this happens.

Transcription

Grace Chlosta: Welcome to the IOFM podcast. This is a podcast for accounts payable and accounts receivable professionals who want to stay in the know with current AP and AR trends and ideas. We'll be interviewing professionals in this space on a wide variety of subjects, including automation, artificial intelligence, career growth, compliance, leadership, and much more.

Today we'll be interviewing Jennifer Huffman. Jen is Director of Professional Services at Symbeo, where she brings over 20 years of real-world expertise in accounts payable to help organizations achieve operational success through AP automation and process optimization. Her career path includes roles as senior manager procure-to-pay, and senior manager global process owner at UPMC and Evoqua Water Technologies. She holds an MBA with a Certificate in Business Analytics from Robert Morris University, and a Bachelor Degree in Accounting.

00:01:02

Jen is also an active member of the Institute of Finance and Management, where she's earned her Accounts Payable Manager and Solution Consultant Certifications. She also serves as the Secretary for the IOFM Central Atlantic Chapter, and is a long-time IOFM Advisory panelist. Today she'll be interviewed by me, Grace Chlosta, Content Manager at IOFM. I joined IOFM in 2022, in a new role for our team, as the Content Manager. I'm responsible for the planning, organization, development, and implementation of all content for IOFM's digital products and virtual and in-person events. I'm committed to ensuring that IOFM's content stays timely, relevant, and actionable for all financial operations professionals, and I work closely with a team of content developers, industry leaders, and subject matter experts to guarantee this happens. 

00:01:54

Hi, Jennifer. How are you doing today? 

Jennifer Huffman: I'm doing great. How are you?

Grace Chlosta: I'm doing good. I'm super excited to have you on the podcast today to talk about benchmarking. It's something we do every year at IOFM. We're actually in the process of doing it right now, so I'm really excited to hear your take on how you benchmark and the importance of it.

Jennifer Huffman: Great.

Grace Chlosta: So if you could just get us started, give a little bit of a definition of benchmarking for our listeners, for those who might not be as familiar with what it is.

Jennifer Huffman: Sure thing. So benchmarking, for me, I equate it to almost like a fitness tracker for business. It involves comparing your processes, performance metrics, and practices against industry standards, or best practices from other companies in similar industries. If you don't have defined processes or performance metrics, it's also a great way to get started, to see what other organizations are using to measure their success of their AP department.

00:02:58

Essentially, it's a way to see how you measure up, identify areas where you might need some improvement, and also set goals based on proven success. 

Grace Chlosta: That's awesome. That's perfect. And why do you think benchmarking is considered such a versatile tool and really just so important in business? It's kind of something we hear about more and more these days. Why do you think that is?

Jennifer Huffman: Yeah, so I think it's versatile because it can apply to nearly any process or function, so whether you're looking at your financial performance or you're looking for operational efficiencies – even customer and supplier satisfaction or employee engagement. I'm sure we've all taken those employee surveys.

00:03:42

Benchmarking can help pinpoint strengths and weaknesses and help you stay competitive, not just internally but externally. It's like having a roadmap that shows you where you're excelling, where you might need to put in more work. For me, benchmarking can take what often feels like chaos and a never-ending to-do list and help bring into focus opportunities for improvement that will have the great impact and value to your organization and your team. 

Grace Chlosta: Yeah, absolutely. And talking specifically about AP, if you could benchmark AP, what are some of the things that you should be tracking? What are some of the things you should be looking for, and how can those really provide insights into your overall organization's financial performance, or just your company goals, anything like that? What are some of the things that we should be looking at specifically in AP?

00:04:41                     

Jennifer Huffman: AP benchmarking just offers a treasure trove of insights. Going from how quickly and efficiently you're processing an invoice, which impacts cashflow and working capital, but even comparing metrics beyond cycle time, like cost per invoice. How much is it costing you to process your invoice? How many errors do you have that are contributing to delays?

All of this can help uncover those inefficiencies and spot trends that impact your bottom line and productivity, and efficiency. But beyond that, it shows you where things are going well, so we can recognize our team efforts and we can showcase to our C-suites or our direct manager all of the great things that the team is doing to help move AP forward. 

Grace Chlosta: Absolutely. These are all great things, all things we should be doing. How do you go about doing this at your company? What are some of the steps that you would take to start benchmarking (and that you have taken) and how does that process kind of look?

00:05:48                     

Jennifer Huffman: Yeah, so I started with asking some tough questions. Some of the questions, I think, that benchmarking helps to answer include: How do our AP processing times compare to industry norms? Why does that matter? So we take a look at: Are we lightning fast, like Usain Bolt, or are we slow like a turtle? Slow processing times can contribute to late invoice postings; we know that, right? It causes issues downstream with expense recognition and gap. Obviously, the late payments can cause friction and urgency in AP, which then impacts team morale, right, if they're constantly chasing the fire of the day or they're constantly dealing with urgent problems, maybe they're losing sight of some other good things they could be working on. So answering that question about our processing times can really help also resolve relationship issues with suppliers.

00:06:48

We ask the question: Are we spending more per invoice than our peers? It's nothing new that finance and AP professionals are constantly being asked to take on more for less, right? Fewer full-time employees, maybe lower budgets for new technology and other tools, so benchmarking can really help identify where you can move the needle, where it's most impactful, where it's most cost effective. Oftentimes, benchmarking can uncover really easy, quick wins, and remove a lot of stress and a lot of pressure on the AP teams. What percentage of our invoices have errors? That's really, I think, an important metric for AP departments to track, because the more invoices that have errors, the harder the team has to work to get those posted, right? 

00:07:44

I encourage my team to think of themselves like detectives. They're solving a puzzle. Unfortunately, every invoice is a potential tangled mess. If 20% of your invoices have errors, and maybe the industry standard is 5% error rate, your team is going to not only feel like, but they're going to be drowning in a sea of mistakes. 

Benchmarking can help you see if you're winning that puzzle-solving championship or if maybe it's time to bring in reinforcements to help you make some improvements there. 

Grace Chlosta: Absolutely. That's all really great advice. A question that I was thinking of: Where do you kind of get your benchmarking comparison data from? What are you comparing all of this to?

Jennifer Huffman: Ooh, great question. If you are a member of IOFM, obviously IOFM's benchmarking reports are extremely valuable, but even a quick Google search can help you find reports from other organizations, other benchmarking organizations.

00:08:49

If you do have contracts with some companies that actually do this, definitely lean into that, but, honestly, don't underestimate a quick web search. There is so much information out there to sort through. For me, I think the biggest challenge in benchmarking is finding what matters to your organization and your team, so understanding what your organizational goals are and then cascading those down into: Okay, what types of metrics are going to help me achieve these broader organizational goals? 

I've leaned into IOFM. I've leaned into some other benchmarking reports. Off the top of my head, I can't think of the names. But, honestly, Google is really a great tool. 

Grace Chlosta: That's awesome. Do you use kind of a prioritization process on what to work on first? And how does that all kind of work out for you?

00:09:50                     

Jennifer Huffman: When I was managing my AP team, I had a handful of metrics that I looked at monthly, and then I would measure those up against our benchmarking reports when they came out, whatever that cadence might be, annually, quarterly. And so what I was looking at was: Was I better than yesterday? Is this metric continually improving, based on where we started? So if I would prioritize something first, it's: Get your baseline. Determine the metrics that are going to matter for you. Typically, for an AP department, your standards are: How many invoices do I have? How are they arriving? Are they electronic? Are they paper? Understanding your invoice mix (like the receiving mix) is important, and then the processing time and cost per invoice kind of are your standard metrics.

00:10:44

When you start diving into why that number looks the way it does, then you start prioritizing the things you need to do within that process to help move the needle. So if we're looking at invoice cycle time, maybe I have a couple of problems. Maybe I have a supplier who doesn't like the send me invoices timely. Maybe they sit on them for an entire month and then, all of a sudden, I have this backlog of invoices. Or maybe I have a vendor that likes to send me a piece of paper and an electronic invoices, which causes duplicate errors. I might want to starting taking a look at those volumes to see where I could quickly resolve the problem. 

I think, in the order of priority, I would start with: Define your baseline. Dive into those metrics. But the key takeaway here is to be consistent. Make sure you're tracking the same metrics month after month, year after year. Add as you go, but start small, and then incrementally build up. 

00:11:45                     

Grace Chlosta: That's fantastic. So you're doing this every year. What are some of the trends that you're seeing in AP benchmarking right now, and how can companies kind of prepare for those going forward?

Jennifer Huffman: I think one of the biggest shifts in benchmarking, as I mentioned earlier, was paper versus electronic. Paper does not seem to be as big of a hot topic as it was a couple of years ago. I think where I see AP departments shifting is more into exception or error-resolution strategies. How do we start solving invoice discrepancies, long approval times? I think a lot of AP departments are moving to be more proactive than anything else.

So I think understanding your error rate and understanding how to work with your suppliers to ensure timely invoice receipt and accuracy is important, but then also shifting that conversation internally to upstream, to your endusers, your buyers, your employees who are ordering from these suppliers, making sure that everyone is working together to ensure accurate information on your invoices. That's been, I think, the biggest shift for me in this kind of benchmarking arena. 

00:13:07

The other shift I'm starting to see is more focus on streamlining automation and reducing the cycle time. When I started in AP – I won't share how many years ago it was, but it was many – our cycle time – for manual data entry, we were lucky if we got an invoice processed and into the system in 15 days. Now we're seeing a demand in the market in AP for almost instantaneous invoice processing. We're looking at five days or less to process an invoice and receipt to posting. Even with automation companies, the demand is higher for an immediate connection into our ERP. 

00:13:56

Gone are the days when we have the luxury of waiting two, three, four days to get an invoice posted into our system, so we're really seeing that push for faster processing times. 

Grace Chlosta: Yeah, absolutely. Switching gears a little bit on actually doing this benchmarking, it seems, obviously, [like] something we should be doing. What are some of the challenges that you could face while you're implementing AP benchmarking, or some that you might have as you were going about it, and how did you overcome those? Or how could some of our listeners overcome challenges that might take place as they're doing benchmarking?

Jennifer Huffman: Yeah. Again, I think where the challenge lies in benchmarking is there is so much information out there. There are so many different data points that AP departments can take to measure the success of their organization. So I think it really needs to be an intentional exercise with your leaders in your organization to say: What are our most pressing challenges or most pressing issues? Is it cash flow management? Is it data visibility? Is it late payments? Is it credit?

00:15:05

Identify your top challenges and then, looking at the benchmarking reports to say: Well, what are others experiencing? So if your invoice exception rate is 20%, up here, and our industry is 5%, that's probably where I should start. So I think one of the biggest challenges is zeroing in on what matters to your organization, because it's going to look different across industries, across teams. So I think starting with that clear vision and setting those realistic goals based on benchmarking data is important. 

I think one of the other challenges is investing in technology to manage all of the data. If you're a large organization and you have large data sets, Excel is not your friend. Excel has limitations. If you don't have data-management tools, like a Power BI or some of the other tools out there, that can also be a challenge for AP departments.

00:16:06

Again, it's being realistic about what you're going to be able to obtain from your ERP or from your automation provider in terms of data and then how that data is going to be managed. For me, that was one of the biggest challenges that I had. Thankfully, we did have a Power BI tool that we were able to use, which proved to be invaluable. But, really, also, engaging your team in the process can be a challenge. I think, in my experience, [for] some folks here, benchmarking, and like the collective eyes roll, and they're like, "Yeah, well, we don't have time for that. We're trying to get our invoices in and pay our vendors. We're not data analysts." 

00:16:46

But engaging your team and providing them the training and encouraging that mindset can really help, because they're boots on the ground, right? They're going to tell you where your challenge is, where you can start putting some metrics and some measurements around there. For me, those were kind of the three big challenges: Finding the most importance metrics, making sure you have the technology and the skillset to analyze that data, and also team engagement. 

Grace Chlosta: What are some other tips and tricks to get your team involved and excited about benchmarking? Anything that you have employed to make them excited about the process?

Jennifer Huffman: Yeah, so I've come from organizations that were heavily focused on individual and department goals, which translates into better opportunities, promotion opportunities. When I talk to my team about the metrics, there's a couple of things. Going beyond professional development for your team and performance management, benchmarking helps resolve their most pressing challenges.

00:17:57

As I mentioned earlier, if you have a high invoice exception rate, your team is spending a lot of time chasing suppliers, chasing approvers. That gets monotonous. It gets demotivating at times because you are just always drowning in problems. I like to say, "Nobody calls AP when things are going well." Usually, we are called when the process has gone sideways and somebody hasn't gotten paid, right? I talk to my team from that perspective, "This is going to help us find the problems we are dealing with every day that could be repetitive. We could solve those problems. And, yes, another one will probably pop up, but that's the beauty of this. You keep just moving the needle. You eventually find yourself just organically innovating as an AP department. 

00:18:51

It also provides upskilling for your AP team. It gives them an opportunity to scale into problem solving and critical thinking, and it removes, again, a lot of the monotony. What I liked to use it for, really, was to brag about my team. Like I said, people really aren't calling accounts payable to say, "Hey, great job paying that invoice, Jen." [chuckles] I'm using it as a tool to be that cheerleader for my team, to recognize, "Hey, here's where we started, and here is where the team has managed to take us through managing these metrics, comparing ourselves to industry leaders in these benchmarking areas." And so it's a true testament to teamwork and collaboration, and it gives them the much needed and deserved recognition. 

Grace Chlosta: That's fantastic advice. I think having that light at the end of the tunnel is really motivating, but how do you ensure that the insights you're gaining from benchmarking can be actionable strategies and improvement for your team and your company? What are the steps that you take once you get all this data to make sure that it's utilized in the proper way?

00:20:05                     

Jennifer Huffman: That's a really good question. Again, I think it's just being intentional about where you're going to have your team spend their time. I hate to say that the squeaky wheel gets the oil, but a lot of times that's just the nature of accounts payable. Benchmarking, I think, is critical for an AP leader, but also for team members to understand, because it gets them into habit of prioritizing. You really need to take a step back and say, "Well, if this metric looks bad, and we know we have room for improvement, what's the ultimate level of effort? What's the tradeoff? Because every time I say 'yes' to something, I'm saying 'no' to something else."

00:20:52

So if we're looking at these metrics very subjectively and saying, "Well, I know I need to improve in this space, but it might take me more time, more resources, maybe I don't have the resource capacity to do that," again, it's just very intentional. I think the exercise in benchmarking is also important because it helps us prioritize. It helps us understand where we might be stepping over a dollar just to pick up a dime. 

Again, it's very collaborative, because what matters to me as an AP leader might not matter to procurement, so looking at these benchmarking metrics holistically will also help encourage cross-collaboration and relationship development with procurement, with sourcing, with treasury, with audit, whoever that might be. 

Grace Chlosta: That's fantastic. Thank you. Any last-minute advice or tips or anything you'd like to give to listeners who might be wanting to implement this and just needing that last little push? Any other closing thoughts?

00:22:02                     

Jennifer Huffman: Yeah, actually. Measuring performance against your competitors provides a reality check for you, helps you see where you might stand in the market and identify best practices, but really that competitive-type intelligence is crucial for strategic planning and growth for your team. I talked about prioritization and optimizing operations, but it goes beyond that. It helps you keep your team on track. It helps remove some of the noise that can distract them, and it also gives you a little bit of a sneak peek at the playbooks of the best teams that are out there, that are at the cutting edge of innovation.

00:22:53

Benchmarking should really not be utilized – I don't want to say not used as a competitive tool. It's not a race. It's not a sprint. It's a marathon. For me, really, the best teams that utilize benchmarking are pulling plays from multiple places. They're looking internally. They're looking externally, and they're really scrutinizing their benchmarking strategies for their particular teams. It's so easy to get caught up in what somebody else is doing and wanting to do it exactly like them. Don't do it. Comparison is the thief of joy. Make sure you are focused more on being better than your team was yesterday, and keep your eye forward and not necessarily backwards. 

00:23:43

The other piece of advice I got from a former leader was: "Don't let perfection get in the way of progress." Just start. That is the most important step in benchmarking is to just start. Things will come together as they're supposed to if you stay consistent, if you involve your team and you keep a spirit of continuous improvement, you'll start to see benchmarking just take shape for you. 

Grace Chlosta: That's all such fantastic advice. Thank you so much, Jen. This has been really enlightening and a fantastic conversation.

Jennifer Huffman: Thank you. I appreciate it. Thanks for having me.

Grace Chlosta: Yeah, we look forward to having you back on in the future. Thank you.

Jennifer Huffman: Thank you.

Grace Chlosta: Thank you so much for listening to the IOFM podcast. Remember to head on over to the Member Forum to discuss today's episode and provide ideas for our next one. And to stay up to date on IOFM's current events, both in-person and virtually, head on over to IOFM.com.