Accounts Payable (AP) is no longer just a back-office function—it’s a strategic part of a company’s financial health. Yet, many AP teams still struggle with inefficiencies, high processing costs, and a lack of visibility into their operations. Without the right metrics in place, it’s difficult to pinpoint bottlenecks, optimize cash flow, or demonstrate the value of AP to the broader organization.
Tracking key metrics allows AP leaders to identify inefficiencies, measure performance, and drive continuous improvements. It provides visibility into process gaps, helps prevent costly errors, and supports better decision-making. More importantly, well-monitored AP operations contribute directly to financial stability by ensuring timely payments, reducing unnecessary costs, and strengthening supplier relationships. By focusing on the right KPIs, AP teams can transition from a reactive, transactional function to a proactive, strategic driver of business success.
Below are five essential AP metrics to monitor, along with industry benchmarks to help assess performance.
1. Invoice Processing Time
The time it takes to process an invoice—from receipt to final payment—has a direct impact on cash flow and supplier relationships. A slow process can result in late fees, strained vendor partnerships, and missed early payment discounts. According to a report by Basware, top-performing AP teams process invoices in as little as three to four days, while others may take up to 17 days. Long approval cycles, manual data entry, and inefficient workflows are often the root causes of these delays.
To reduce invoice processing time, AP leaders should look for opportunities to eliminate manual touchpoints and automate key steps. Implementing an AP automation solution can significantly streamline invoice approvals by automatically routing them to the appropriate stakeholders and reducing the risk of errors.
2. Cost Per Invoice
Processing invoices manually can be expensive, especially when factoring in labor costs, paper storage, and error resolution. According to APQC, best-in-class AP teams process invoices for as little as $1.42 per invoice, while less efficient teams spend over $8 per invoice. These costs can quickly add up, particularly for organizations handling thousands of invoices each month.
Reducing the cost per invoice requires a shift from manual processes to digital workflows. Transitioning from paper invoices to electronic submissions, leveraging intelligent data extraction, and automating approval processes can help drive costs down. Additionally, choosing an AP automation system that integrates with your ERP ensures that financial data flows seamlessly, reducing reconciliation errors and unnecessary administrative costs. For organizations looking to implement automation, it’s important to evaluate solutions based on scalability and ERP compatibility. More information on selecting the right AP automation software can be found here.
3. Invoice Exception Rate
Invoice exceptions—caused by missing or incorrect data, duplicate invoices, or mismatched purchase orders—can significantly slow down AP processing and increase operational costs. The Institute of Finance & Management (IOFM) reports that nearly 24% of all invoices require manual intervention, which extends processing times and creates additional work for AP teams. A high exception rate often points to issues in data accuracy, supplier invoice formatting, or internal workflow inefficiencies.
Addressing invoice exceptions requires a combination of process improvements and technology. Standardizing invoice submission formats, improving supplier communication, and using automation to detect discrepancies early in the process can help reduce exceptions. Many modern AP automation solutions include machine learning-based validation tools that flag errors before they enter the approval process, ensuring that only accurate invoices move forward. This reduces the need for manual intervention and speeds up processing times.
4. On-Time Payment Rate
Timely payments are critical for maintaining strong supplier relationships and avoiding late fees. However, a surprisingly large number of companies struggle with on-time payments. Studies show that only 56% of supplier invoices are paid on time, which can lead to damaged vendor trust and less favorable payment terms. Missed payments can also create cash flow issues, making it difficult for AP teams to maintain accurate financial forecasts.
Improving on-time payment rates requires better invoice visibility and stronger workflow automation. Automated reminders and approval workflows help prevent invoices from getting lost in the approval process, while centralized dashboards allow AP teams to track payment deadlines more effectively. Prioritizing invoices that offer early payment discounts can also create cost savings while strengthening supplier relationships. AP automation tools that integrate with payment systems can further streamline this process by scheduling and executing payments without manual intervention.
5. Percentage of Electronic Payments
Despite the widespread availability of digital payment solutions, many AP teams still rely on paper checks, which are not only costly but also pose significant security risks. The Association for Financial Professionals (AFP) reports that 81% of organizations have experienced check fraud attempts in recent years, highlighting the vulnerabilities of paper-based payments. Transitioning to electronic payments, such as ACH, virtual cards, or wire transfers, can reduce fraud risks, lower transaction costs, and improve payment efficiency.
Increasing the percentage of electronic payments starts with supplier engagement. Many vendors are willing to accept digital payments but may not have been encouraged to make the switch. Educating suppliers on the benefits of ACH and virtual card payments, offering incentives for electronic invoicing, and integrating AP systems with banking platforms can accelerate this transition. Organizations that successfully shift the majority of their payments to digital formats often see significant cost savings and improved payment security.
Final Thoughts
Tracking and optimizing these five key AP metrics can have a significant impact on financial efficiency, operational costs, and supplier relationships. Invoice processing time, cost per invoice, exception rates, on-time payments, and electronic payment adoption all play a role in creating a high-performing AP department. By leveraging automation and ensuring alignment with ERP systems, organizations can streamline workflows, reduce inefficiencies, and improve overall financial performance.
For businesses looking to modernize their AP processes, Ascend AP is a solution that helps optimize each of these critical areas. With intelligent automation, seamless ERP integration, and advanced fraud prevention features, Ascend AP enables teams to improve invoice processing times, reduce costs, and eliminate payment delays.
To learn more about how AP automation can transform your financial operations, click here:
