APEX analytix has been tracking AP, Purchase-to-Pay and Shared Service Centres performance for 25 years, and have seen an evolution from the transactional focus to integrated P2P and process transformation:

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Best-in-class AP performers

The latest APEX analytix Financial Leaders’ Benchmarking Report showed that in the best AP performers:

• 93% of AP organizations are closely partnered with their business’s procurement functions, 46% also closely partnered with the internal audit function, and 37% with the regulatory compliance function.
• 87% have a global chart of accounts; 89% submit monthly AP metrics to senior management; 79% have service level agreements with customers; 63% have a global payables platform—but only 35% conduct satisfaction surveys with suppliers, a key input to maintaining productive supplier relationships and a potential area for improvement
• 72% of AP organizations have an on-time payment performance of over 70%. Only 35% of AP organizations manage to exceed 90%, though—and almost one in five of AP organizations fail to measure their on-time payment performance at all.

Cash management practices and missed opportunities

Best-in-class practices include:

Source & Copyright©2017 - APEX analytix

There are important opportunities that have been missed to improve payables controls including: 

• 86% of AP organizations don’t reconcile contract price variances monthly
• 60% don’t track or prevent ‘after the event’ purchase orders.

The benchmarks report also revealed that there are still important opportunities to:

• retain cash within the business by capturing discounts in exchange for accelerated payments:
  • 43% of businesses capture over 80% of the discounts available to them
  • 10% capture less than 60% of available discounts
  • 41% do not formally track levels of discount capture at all.
• Improve percentage of the supplier base from which discounts are obtained:
  • Some 22% of organizations manage to obtain discounts from 3% to 10% of the supplier base
  • A full third of businesses do not track this metric at all
  • (APEX analytix accept that AP organizations cannot work in isolation on this: they will need to work together with their business’s procurement functions. But the low percentages of discount capture reported by organizations indicate that this collaboration will be worthwhile.)
• Set up a supplier portal for: Supplier registration, Invoice and payment tracking, and providing Dynamic discounting which many A/P departments are missing out on.

Key opportunity areas

The report closes with a list of the key opportunity areas for A/R departments:

• Putting in place a supplier portal
• Payment control practices
• AP organization structure and leadership, with AP organizations and procurement functions under common leadership
• Capturing (and reporting on) available supplier discounts
• Putting in place a global contract repository
• Addressing the proliferation of payment terms and conditions
• Reconciling price variances at least monthly
• Checking for compliance with supplier contracts and negotiated agreements
• Monitoring (and preventing) ‘after the event’ purchase orders.