Setting goals for the AP team is an effective way to align your department with your organization’s long-term mission and deliver a strategic advantage that helps the bottom line. Many organizations target goals like:
- Accelerating the invoice process
- Getting more early-payment discounts
- Reducing the error rate
These goals target notorious issues that block AP departments’ success, especially those still relying on manual processes.
With AP automation, these outcomes are within reach. AP automation’s efficiency gains and data enable organizations to set trackable, measurable, meaningful goals. To help you get started, we’re laying out our top three tips for setting achievable AP goals, plus eight common examples of AP goals.
3 Tips for Setting AP Goals Successfully
1. Review and Audit Your Existing AP Process and Department
Addressing the existing processes holding you back is critical to meeting your AP goals. You need to know where failures occur to improve your department and AP process. Then, examine each step and identify opportunities for improvement. Some processes may need a little fine tuning while others may need a full replacement.
In this stage, many organizations trade their paper-driven processes for AP automation to digitize and streamline their operations. Don’t just “copy and paste” your old workflows when pursuing AP automation. It’s likely that some processes can be cut altogether or need some editing.
Then, in the post-implementation phase, you’ll see AP automation can reduce costs, risk, and errors while gaining better access and sharing abilities. You’ll be closer to reaching many common AP goals, including several examples in the “8 AP Goals and How AP Automation Can Help” section below.
2. Set Up SMART Goals
SMART goals refer to the acronym:
- Specific. Ensure that your goals are as detailed and clear as possible, like the aim to reduce the time necessary to complete a particular task.
- Measurable. Define metrics that are trackable so you can easily detect and report improvements.
- Achievable. Set a realistic destination for each goal you make. You may need to break up long-term goals into smaller milestones to ensure that they’re doable for your team given your circumstances and the resources available. It’s also helpful to involve the internal experts who manage your cash flow statements and create your financial models. They will have valuable insights into your data and whether goals are realistic.
- Relevant. Do your goals align with your AP department’s mission? Keeping this question in mind may prevent you from focusing too much energy on a process that’s irrelevant to your core work.
- Time-Bound. Establish a specific time frame in which your goal and smaller milestones must be achieved. These stopping points will act as opportunities to assess progress, success rate, and make adjustments.
Keeping SMART in mind when identifying new objectives will help you stay grounded so you can set goals that you can realistically achieve.
3. Zero in On the Top Three Goal Categories of AP Goals
Adaptability, efficiency, and accuracy are the top three overarching goal categories that organizations often target. These focuses can make the biggest impact on AP success, and you can apply them in many ways.
There’s little room for error throughout the AP process, making accuracy a vital goal to strive for. And there are many ways to attack this overarching goal: Accuracy’s role in AP goes beyond simply entering data correctly and avoiding misfiles. It also includes maintaining audit trails, frequent updating, and process standardization.
Another prime place to start is efficiency. Look at each step of every process in your department. How can you finish the job with less time, resources, and effort? As previously mentioned, some processes will need to be rebuilt from the ground up, while others may only require minor adjustments.
Your company will evolve along with your industry, customer demands, and the economy. As a result, it’s wise to avoid overly restrictive AP processes. Instead, striving for adaptability in the AP department and beyond will help protect your organization’s competitiveness and credibility over time.
Now it’s time to put these three goals into action. For inspiration, here are 8 of the most common AP goals across organizations and how many of them go hand in hand with AP automation.
BONUS: 8 AP Goals and How AP Automation Can Help
Inside the 8 AP Goals
1. Saving Time
When you increase your AP processes’ efficiency, your staff reduces the time they spend on mindless error-prone work, allowing them to focus on more enjoyable, strategic tasks.
To accomplish this, many organizations turn to AP automation. This technology can automate manual processes like invoice processing, payment approval, tax reporting, updating vendor records, registering and validating suppliers, chasing down papers, and more.
Beyond automation, you can save time by using RPA and other intelligent automation technologies. These tools collect data across various applications for faster processing times and more efficient integrations.
But saving time doesn’t just make your employees’ lives easier. Faster, more seamless invoice processing means fewer delays that hurt your vendor relations and customer reputation. It can even mean lower labor costs.
2. Cost Reductions
High cost per invoice can be an expensive burden for organizations with inefficient AP processes. At the highest, it can cost an average of $8-10 to manually process an invoice. That’s why organizations aiming to reduce costs turn to AP automation, which can decrease invoice processing costs to $2 per invoice.
AP automation also directly enables you to save money in other ways, like:
- Gain more early-pay discounts – IOFM found that most businesses receive under 21% of these offers, and 12% don’t receive any.
- Avoid missed payments and late payment penalties.
- Reduce hours devoted to repetitive work.
- Improve transparency in processes like audit trails.
- Find process bottlenecks that are consuming your time and budget.
3. Enhancing Data-Driven Decision Making
When setting any goal, it’s always best to draw from previous data. While many organizations believe they lack such data, in most cases, it exists. It’s just disorganized and difficult to access.
This is another reason to implement AP automation. AP automation solutions offer tools that can generate real-time dashboards and reports and ensure data quality. With these views, you gain full visibility of the AP process. Having access to this data will aid you in your goal-setting and other future decision-making.
4. Increasing Employee Digital Adoption and Proficiency
You can’t reach any AP goals if you’ve failed to provide the training and resources necessary for employees to get their work done. If you’re introducing new technology, digital adoption is one of the primary determining success factors. Set the long-term goal of maintaining introductory and ongoing training programs, including refresher courses. It will be helpful to specify timeframes, milestones, and a plan for tracking progress. You should also prepare to offer ongoing support to solve problems and answer questions as they arise.
Of course, the lack of training isn’t the only obstacle to digital adoption and proficiency. You will also encounter resistance to change. Investing in employee training and ongoing support can help lower resistance by empowering employees to feel confident in their abilities, but other tips include:
- Relate the “why” for the change directly to them by explaining how it will solve a problem they currently struggle with or make an aspect of their daily lives easier.
- Encourage feedback and questions.
- Explain how your industry in changing and how evolving with the times is a non-negotiable for your company to remain competitive.
You can learn more about how to prepare your employees for digital transformation here.
5. Invoices Paid on Time
Whether you pay invoices on time has huge implications on your organization’s reputation and overall cash flow. To ensure your invoices are paid at the right time, set timeliness goals based on the invoice’s details: Invoices with early-payment discounts should be paid early, but all others should be paid on the precise day they’re due. AP automation supports this goal by accelerating the AP process. As a result, it’s easier to catch discounts and pay invoices on time.
Common performance-related goals in the AP world include:
- Gained Efficiencies
- Performance Against Budget
- Cost Savings
Pro tip: Automating the entire AP process is more worth your while than automating individual pieces. Investing in improving the whole process at once will lead to greater gains in each goal and other benefits.
7. Payment Metrics
It’s also important to track and analyze metrics demonstrating how many payments your department completes each week, day, and the frequency of their arrival. For example, the exception rate is one of the most important metrics. Exceptions are prone to creating backlogs that increase your cost per invoice. However, when you examine these metrics regularly, you’ll be able to identify problems, determine if they’re coming from your end or your vendor’s, and address them promptly. Plus, tracking these metrics allows you to easily keep an eye on your AP department’s performance throughout the process.
In addition to your exception rate, watch your organization’s days payable outstanding (DPO). Specifically, set goals that keep your DPO in a healthy range – that is, without being too high or too low. Doing so will bolster your organization’s financial health overall.
8. Boosting Consistency and Accuracy
Another impactful AP goal is increased accuracy. This could mean invoice data capture accuracy, payment accuracy and control, and more. For best results, be as specific as possible when setting accuracy goals. Set a realistic timeline and select the precise areas you wish to improve. It’s also essential to measure progress regularly and to do so using consistent metrics.
AP automation is well suited for this goal, as top solutions capture invoice data at 99.5% accuracy. And when you automate tedious, error-prone processes, your accuracy naturally increases. AP automation also standardizes your invoices’ data into workflows, ensuring reliable consistency in your AP processes.
Naviant customer, Clay Lacy Aviation, went from a 10% error rate to 0.2% for their invoice processing using ABBYY FlexiCapture and OnBase, the powerful tools behind the Naviant AP Accelerator. Learn more about the different ways AP automation can increase accuracy from Clay Lacy Aviation’s AP automation success story below.
Clay Lacy Aviation’s OnBase & ABBYY FlexiCapture Success Story
Want to know more about how Clay Lacy Aviation boosted its efficiency in its AP department and beyond using these two solutions? Get the full story in our new case study.
Achieve Your Goals with AP Automation
As your organization grows and evolves, traditional AP processes won’t be enough to support your AP goals. Their manual, slow nature may even inhibit further growth. AP automation eliminates manual processes and provides the tools you need to analyze, audit, and improve the AP process. This way, you can set and achieve impactful goals, making your AP department a pivotal driver of change in your organization.
If you have a question or are ready to explore what AP automation can do for your organization, drop us a message in the chat.