ap benchmarking study - amazon web services · 2019-12-04 · ap benchmarking study using key...
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May 20 – 22, 2018 | Orlando, FL
AP Benchmarking StudyUsing Key Metrics to Chart Your AP Performance Improvement Journey
May 20 – 22, 2018 | Orlando, FL
Two Benchmarking Breakout Sessions
Introduction to Benchmarking• Why Benchmark?• How to Benchmark?• What to Benchmark?
Will focus primarily on efficiency metrics:• Invoice per FTE• Paid on Time• Cost Per Invoice• Staff Leverage Ratios
Shared Services Benchmarking(11am-12pm, Track E)
AP Benchmark Report
I’m Ready to Benchmark. Now What?(Most Relevant For Centralized AP Operations)• Keys to building a measurement process• Using data to (re)set performance goals
Will focus primarily on effectiveness metrics:• PO First Pass Match Rate• Share of PO Invoices with a Mismatch• Share of PO Invoices Requiring Correction• Share of Duplicate Payments
May 20 – 22, 2018 | Orlando, FL
WHY BENCHMARK?Introduction to Benchmarking
May 20 – 22, 2018 | Orlando, FL
Two Reasons to Benchmark:1. Is my current performance “good”?2. How much of an improvement is realistic?
May 20 – 22, 2018 | Orlando, FL
How to Sell the Need to Benchmark
Significant Dollars Are at Stake Due to:
• Regulatory Compliance Missteps
Use and sales tax, 1099, 1042s and OFAC Compliance, Unclaimed Property Audits
• Unpursued or Uncollected Early Pay Discounts
Savings can easily offset total labor costs for AP and Procurement Operations
May 20 – 22, 2018 | Orlando, FL
What’s In It For The Business?
Annual PO Spend ($)x 5%x 2%x 98%
_______________________Annual Early Pay Discount ($)
Best Practice
Potential 5% of total PO volume
Opportunity 2% of Invoice amount
Results 98% of potential opportunity
May 20 – 22, 2018 | Orlando, FL
Annual PO Spend Share of Invoices with Early Pay
Discount Potential(Best Practice: 20%)
Share of Spend (Best Practice: 2%)
Share of Discounts Captured
(Best Practice: 97%)
$50 Million $10 Million $200,000 $194,000
Are You Saving As Much As You Could?
May 20 – 22, 2018 | Orlando, FL
HOW TO GET STARTED BENCHMARKING?WHAT TO CONSIDER BEFORE DATA COLLECTION
Introduction to Benchmarking
May 20 – 22, 2018 | Orlando, FL
How many of you think you’re good at your job?
How do you know?
Best Practice Considerations
May 20 – 22, 2018 | Orlando, FL
How to Know if You’re Good at Your Job
Step 1. Define “your job”
Step 2. Define “good”
Step 3. Define the measures used to quantify “your job” and “good”
Step 4. Establish a data collection plan
Step 5. Execute the plan: collect, analyze and report the data
Step 6. Benchmark your performance against peers and goals
Step 7. Identify how you’ll change performance based on results
Best Practice Overview
May 20 – 22, 2018 | Orlando, FL
How to Know if You’re Good at Your Job
Step 1. Define “your job”Step 2. Define “good”Step 3. Define the measures used to quantify “your job” and “good”Step 4. Establish a data collection planStep 5. Execute the plan: collect, analyze and report the dataStep 6. Benchmark your performance against peers and goalsStep 7. Identify how you’ll change performance based on results
Best Practice Overview
What would happen if you skipped a step?Could you replicate for your team, function, and process?
May 20 – 22, 2018 | Orlando, FL
WHAT TO MEASURE & BENCHMARK?CHOOSING THE RIGHT METRICS AND PEER GROUP(S)?
Introduction to Benchmarking
May 20 – 22, 2018 | Orlando, FL
Maintain a Mix of Measures
LaggingIn-
ProgressLeading
May 20 – 22, 2018 | Orlando, FL
Maintain a Mix of Measures
Lagging
In-Progress
Leading
Total cost of ‘Process Accounts Payable’Total cost of AP staff compensation as a share of Total AP costs
Example:
Share of invoices, split between PO vs non-PO
Cycle time measures
May 20 – 22, 2018 | Orlando, FL
Identify Unintended Consequences
May 20 – 22, 2018 | Orlando, FL
Examples of Common Benchmarks
See Benchmarking
Report
May 20 – 22, 2018 | Orlando, FL
Are You World Class?
Efficiency Metrics
• Pay on Time Rate: >90%
• Process nearly 23,000 invoices annually per FTE
• At an internal cost of $1.77/per invoice
Source: IOFM’s 2017 AP Benchmarking Study
May 20 – 22, 2018 | Orlando, FL
AP Process Maturity Journey
May 20 – 22, 2018 | Orlando, FL
Automation of Processes
• No more than 20% of invoices received electronically
Limited Automation
• 21%-69% of invoices received electronically
Moderate Automation • At least 70% of
invoices received electronically
Significant Automation
May 20 – 22, 2018 | Orlando, FL
Centralization of Operations
• Distributed throughout businesses; no single AP department
Decentralized
• Some AP functions operated together, but many are still scattered across the business
Partially centralized • All AP functions work
in a single group, but AP is not operating jointly with other related functions
Centralized –but not a SSC
• All AP functions are combined and working in tandem with all related functions
Shared Service
May 20 – 22, 2018 | Orlando, FL
Cost Per Invoice
May 20 – 22, 2018 | Orlando, FL
Annual Number of Invoices Per FTE
May 20 – 22, 2018 | Orlando, FL
Share Who Pay >90% of Their Bills on Time
May 20 – 22, 2018 | Orlando, FL
Ratio of AP Specialists Per Manager
May 20 – 22, 2018 | Orlando, FL
KPIs Peer’s
Target Range
Current
Performance
Performance
Gap
Notes
EFFICIENCY
Invoices Per FTE
Paid-on-Time
Cost Per Invoice
Staff Leverage Ratios
EFFECTIVENESS
PO First Pass Match Rate
% of PO Invoices With a
Mismatch
% Requiring Corrections
% of Duplicate Payments
EXAMPLE: KPI Dashboard Template
May 20 – 22, 2018 | Orlando, FL
JESS SCHEER EXECUTIVE [email protected]
Introduction to Benchmarking
Questions?