Every now and then someone put the spotlight on the right things. Using fancy words is so easy – finding common understandings and ways of utilizing those opportunities is much harder.
P2P can be such a fancy word. As a shared service organization and the meaning might be purchase-to-pay and moving a PO/non PO order to payment, measuring efficiency in payable outstanding, delay fees, angry phone calls from suppliers etc. Ask a procurement organization dealing with direct spend and it might be about demand management executed in a lean way operating a supply chain in a standardized and controlled way. Ask an indirect spend organization and it might be about increasing purchases made from contracted suppliers, PO’s being used and spend being lowered.
None of it is of course wrong, but each doesn’t display the entire picture.
This article from PayablesPlace does give a richer picture of these end to end processes, highlighting those metrics that we love to hate. However, note that metrics rating improved internal efficiency is not there – is that just to hard to measure? When talking indirect spend – doesn’t it have to be there? And continuous improvement – ways of constructing metrics that measure cross-functional flows should be there too.
Metrics depending on what your focus on from PayablesPlace;
- Cost per invoice, purchase order and/or transaction
- Invoice cycle time – Average length of time from receipt of an invoice up to payment approval
- Purchase order cycle time
- Number of invoices processed per FTE
- Percentage of invoices process straight-through
- First time match rate
- Number of supplier inquiries
- Paid on-time percentage
- Percentage of invoices received electronically – should not include email attachments, PDF, paper or fax
- Percentage of suppliers submitting electronic invoices
- Percentage of suppliers accepting electronic payment
- Percentage of payments made via Check/ACH/Card/Wire
- Early payment discounts captured – Dollar amount or as a percentage of total opportunity
- Percentage of suppliers participating in early payment program
- Days Payable Outstanding
- Purchase Order compliance
- eInvoicing compliance
- Non-compliant spend or Off-contract spend