This blog first appeared on the Corcentric website.
AP departments that are drowning in data need reporting that will inspire CFO confidence. Here are five essential reports you should be producing.
A recent Ernst & Young survey that explored CFOs concerns and issues offers a sobering statistic: only 55% of the 1,000 CFOs that responded are fully or somewhat confident that the reports generated by their company are complying with all reporting needs. What’s most concerning is the fact that in 2014, that percentage was 84%.
Although this report dealt with all reporting, we know that there are concerns regarding reporting in the AP sector as well. The reason behind this is that we all have too much of a good thing. That good thing is information…information in the form of Big Data. CFOs have more data than ever before and that’s leading to data overload. If you can’t extract any value from this overwhelming mass of data, then what good is it? What’s needed is the ability to organize that data efficiently in order to monitor key performance indicators.
That’s why AP departments looking for an automation solution for their purchase-to-pay processes should look for one that organizes reports into dashboards and offers other ad hoc reporting capabilities to monitor KPI’s. These reports should also identify departmental and process inefficiencies and impediments to productivity. In fact, best-in-class AP departments are twice as likely as others to set processes for dashboard solutions.
If you are looking for the right AP solution to give your CFO the confidence he needs, make sure the following five reports can be produced:
- Average Cost per Invoice – The cost per invoice is directly related to the amount of time it takes to approve those invoices. Delays in receiving, processing, approving and paying invoices can increase invoice costs. And that can lead to missed discounts and late payments.
- Number of Invoices Processed per FTE – Before automation, the average FTE can process 1,000 invoices per month; after automation, that number increases five-fold and goes even higher when those invoices are PO-based. Identifying which employees are meeting the standard will allow management to optimize staff performance.
- Percentage of Invoices in Review – Finance can get full visibility into the entire payables process from receipt of the invoice through approval. This offers another opportunity to identify and improve problem areas in processes.
- Straight Through Processing Rate – Valuable information results from measuring the number of invoices sent straight through the payables workflow the first time without manual intervention or delay. High first-time match rates result in better productivity, lower costs per invoice, and a larger number of invoices paid on time.
- Days Payable Outstanding (DPO) – Successful cash management means knowing exactly where your liabilities are. Some companies extend their DPO under the assumption that it boosts capital. But companies that really track savings resulting from early-pay discounts may find that on-time payments make more sense.
It’s also important that whatever solution is selected offers customers the opportunity to create a variety of ad hoc reports specific to their needs. Financial monitoring and reporting also enables companies to ease compliance, including SOX compliance. But running these reports sporadically won’t resolve any issues. In fact, according to an Aberdeen Group report, best-in-class AP departments are 176% more likely to measure performance on a monthly or more frequent basis.
Will these and other reports give your CFO more confidence? As The Accounts Payable Network noted in a 2014 white paper, “CFOs will embrace solutions that furnish the information and functionality necessary to improve the accuracy, timeliness, and overall quality of their projections.”