For the last twelve years, Ardent Partners has leveraged a unique framework to highlight the performance of top-tier or Best-in- Class organizations (versus all others) by analyzing a specific set of benchmark criteria. Ardent Partners defines Best-in-Class performance as the 20% of enterprises with the lowest average invoice processing costs and shortest average invoice process cycle times. Top-performing enterprises have taken their AP operations to the next level by leveraging technology to streamline the AP process, make it more efficient, and enable more strategic activities to be carried out. Best-in-Class enterprises have demonstrated their ability to drive superior performance across both traditional and modern accounts payable metrics. Within the realm of AP and financial performance, Best-in-Class AP programs currently enjoy distinct advantages over their peers.
Best-in-Class AP programs have leveraged a robust blend of technology, innovation, and strategic thinking to gain significant and sustainable advantages over their peers. These organizations have achieved:
- An 80% lower invoice processing cost, which is a stark advantage considering the sheer volume of invoices processed weekly or monthly within the average business. Invoice processing costs, as simple and fundamental as they may be, remain a major benchmark for AP performance because the metric reflects the level of efficiency present within the program. Best-in-Class enterprises have long driven a significantly-lower invoice-processing cost due to their reliance on core capabilities and their higher usage of ePayables solutions.
- A 73% faster invoice-processing time, which not only allows Best-in-Class AP groups to take advantage of more early payment discounts, but also frees this staff to assist or support in more strategic financial activity. Invoice- processing speed remains a core KPI from which to gauge the effectiveness of vital AP competencies. Best-in-Class organizations leverage the power of automation and efficiency to improve processes related to invoice receipt, approval workflow, and payment scheduling. Combined with the KPIs above, both cost and speed reflect the power of a Best-in-Class AP function and its ability to master the art of tactical financial operations.
- A 60% lower invoice exception rate, which is a massive lead by the Best-in-Class AP teams and another instance of the top-performers’ overall advantage. While their 10.1% average exception rate is still higher than any organization would like, these top-performing businesses are actively spending less of the group’s time hunting down additional information and filling in critical data gaps for invoices. This has a cascading effect on other financial measures, including and most importantly, a faster time-to-process rate, lower costs, and reduced exposure to payment risk.
Perhaps the clearest reflection of a Best-in-Class AP function is its straight-through-processing (“STP”) rate, which is over three-times that of all other businesses. Straight-through-processing, referred to by Ardent Partners as the “holy grail” of the modern AP department, involves invoice-processing freely-flowing through the entirety of the AP process in a digital and “touchless” manner without any human intervention.
This digital realm is not just limited to STP, however: Best-in-Class AP functions have driven a 64% higher rate of suppliers electronically enabled to submit invoices. This factor is without a doubt one of the most crucial across the entirety of AP performance; after all, in 2021 digitization became the goal of most AP teams – the ability to automate key areas within AP and keep staff working remotely was the safest bet during the pandemic, it is also the smartest bet in the “New Normal.”
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