How can you establish invoice processing benchmarks for Corporate Accounting?

Invoice processing is a vital function of corporate accounting, as it affects cash flow, compliance, and customer satisfaction. However, how do you measure the efficiency and effectiveness of your invoice processing system? How do you compare your performance with industry standards and best practices? In this article, you will learn how to establish invoice processing benchmarks for corporate accounting using four steps: define your goals, identify your metrics, collect your data, and analyze your results.

1 Define your goals

Before you can set up invoice processing benchmarks, you need to have a clear idea of what you want to achieve and why. What are the main objectives of your invoice processing system? How do they align with your overall business strategy and accounting policies? For example, you may want to reduce invoice processing costs, improve payment accuracy and timeliness, enhance customer service, or comply with regulatory requirements. Your goals will help you determine the scope, frequency, and format of your benchmarking process.

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Tomi Akinwale ACCA, ACA, ACTI, B.TECH, FMVA, AAT.

Tax | Deloitte | Financial Reporting & Modelling |
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First define your goals and be clear on the objectives. Use SMART goals techniques to make sure goals are simple measurable achievable and relevant to the objectives.

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Cristian Palermo

Gerente de Facturacion, RA, TMS y Cuentas a Pagar en OCASA | Facturación, KPIs, Costo Plan
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En mi opinión, el principal objetivo de la correcta y eficiente contabilización de facturas consiste nada mas y nada menos que en garantizar la precisión y la velocidad de registración asignando los ingresos y los compromisos por pagar a las partidas correctas. Esto nos permitirá alcanzar el cumplimiento de plazos con proveedores y agilizar el proceso de presentación y cobro de facturas a nuestros clientes

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2 Identify your metrics

When measuring invoice processing performance, it's important to choose the relevant metrics to compare with others. Common metrics include invoice volume, cycle time, accuracy, exception rate, automation rate, and processing cost. Invoice volume is the number of invoices processed in a given period. Invoice cycle time is the average time it takes to process an invoice from receipt to payment. Invoice accuracy is the percentage of invoices that are processed without errors or disputes. Invoice exception rate is the percentage of invoices that require manual intervention or special handling. Invoice automation rate is the percentage of invoices that are processed electronically without human involvement. Lastly, invoice processing cost is the total cost of processing an invoice, including labor, technology, and overhead.

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Cristian Palermo

Gerente de Facturacion, RA, TMS y Cuentas a Pagar en OCASA | Facturación, KPIs, Costo Plan
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Volumen de facturas recibidas vs procesadas Tiempos y demoras de procesamiento Facturas pendientes de registrar al cierre de periodo Crédito fiscal no incorporado en el periodo Cantidad de facturas por fuera de circuitos ordinarios Cantidad de facturas procesadas por analista

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3 Collect your data

Once you have selected your metrics, you need to collect the data that will help you calculate them. You can use various sources of data, such as your accounting software, your invoice processing system, your payment records, your customer feedback, or your internal audits. You should also decide on the time frame and the frequency of your data collection, depending on your goals and resources. For example, you may want to collect data monthly, quarterly, or annually, and compare it with the same period in the previous year or the current industry average.

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Cristian Palermo

Gerente de Facturacion, RA, TMS y Cuentas a Pagar en OCASA | Facturación, KPIs, Costo Plan
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Considero que el mejor seguimiento de la gestión del área se consigue con metricas mensuales y un acumulado de 13 meses, donde se pueda medir la evolución del año y comparar contra el mismo mes del año anterior. Esa mirada nos va a permitir tener ademas de nuestros indicadores, el comportamiento estacional del area

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4 Analyze your results

The final step is to analyze your data and compare it with your benchmarks. You can use various tools and methods to do this, such as spreadsheets, charts, graphs, dashboards, or reports. You should look for patterns, trends, gaps, and opportunities in your data, and identify the strengths and weaknesses of your invoice processing system. You should also evaluate the impact of your invoice processing performance on your business outcomes, such as cash flow, profitability, customer satisfaction, and compliance. Based on your analysis, you can then set improvement targets, prioritize actions, and implement changes to optimize your invoice processing system.

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Cristian Palermo

Gerente de Facturacion, RA, TMS y Cuentas a Pagar en OCASA | Facturación, KPIs, Costo Plan
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Definir / Medir / Controlar Es la clave de cualquier proceso operativo para poder mejorarlo Es clave que la definición de las metricas y la obtención de la información sea sostenible. Si la generación de información para obtener las metricas se convierte en una actividad de dificil ejecución, nuestros indicadores caerán en desuso y no podremos alcanzar los resultados que buscamos

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Michael Dennis

Author of "Credit & Collection Handbook." "Credit and Collection Manager's Concise Desk Reference." "Customer Profit Hacking" "Happy Customers, Faster Cash" "Credit & Collection Forms and Procedures Manual"
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I am convinced that the single most important invoice processing metric is typically the invoice processing time or cycle time. This metric measures the amount of time it takes for an invoice to be received, processed, approved, and paid. Invoice processing time is critical because it directly impacts on cash flow: Delays in processing invoices can lead to delayed payments. Timely processing of invoices ensures accurate recording of expenses and liabilities in financial statements, providing stakeholders with reliable financial information for decision-making purposes.

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How can you establish invoice processing benchmarks for Corporate Accounting?

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1 Define your goals

2 Identify your metrics

3 Collect your data

4 Analyze your results

5 Here’s what else to consider

Corporate Accounting

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