If you ask the AP department if accounts payable is working efficiently, chances are the answer will be “yes.” But just because AP thinks their process is efficient and that the status quo works just fine doesn’t mean there’s no room for improvement. It might just mean that the team has gotten very good at working with an inefficient system.
Over 90% of AP teams have already digitized their process, but more than half are still only partly automated, and 30% report having less than a quarter of their systems automated (ERP.today). This gap between digitization and automation is a missed opportunity for optimization.
To find out if your AP process really is efficient, take a look at the data. Track key performance indicators (KPIs) to see how your AP department is really doing. Ask the AP team questions about how the process really works and what would happen if transaction volume doubled. The answers to those questions and the data you gather will help you assess if the AP process really is efficient and pinpoint ways to better support the AP department.
Can The System Scale?
If invoice volume suddenly doubled, where would the AP team have problems?
It might be hard to answer that question with an inefficient AP system where the AP team is already finding workarounds for things that aren’t streamlined. With a more efficient system, the AP team should be able to identify where the bottlenecks would be if you try to scale up the AP process.
In many cases where the AP department reports high efficiency, it’s not the AP process that’s efficient. It’s the AP team that has found a way to work with inefficient processes. That innovation and problem-solving is great, but in those cases the AP team could be doing so much more if they were working with a better system.
KPIs To Investigate
Rather than asking vague questions about efficiency, tracking key performance indicators gives you a better look at where your AP process is efficient and where it needs to be optimized. These KPIs give your finance team a much clearer picture of how the AP process is working:
- Invoice processing cost.
- Average cycle time and standard deviation.
- Percent of payments earning rebate revenue.
- Percent of payments using checks.
- Vendor master records changed and checked each month.
Invoice processing cost
We’ve found that organizations using fully automated accounts payable processing save an average of $14.93 per invoice compared to organizations that manually process invoices. If your cost-per-invoice is over $10, then your company would benefit from changes to lower processing costs.
Average cycle time and standard deviation
For one company that we worked with at NextProcess, automating took their average cycle time down from 45+ days to 5 days or less per invoice. Across the board, automation reduces the average cycle time for invoices to just 5.4 days. When the invoices are attached to purchase orders, NextProcess’s system usually matches and processes them in 12 hours or less. If your company’s average cycle time is much longer than 5 days or if there are outlying invoices with significantly higher cycle times, then it’s time to revisit your AP processes.
Percent of payments earning rebate revenue
When your company can put payments onto virtual cards with rebate programs, you’re monetizing accounts payable. Instead of just being a department where money leaves the company, AP starts earning revenue. Tracking what percentage of payments earn rebates helps you see how efficient AP is at making money.
Percent of payments using checks
Some vendors require check payments, but checks expose your company to a greater fraud risk. According to the AFP 2026 Payments Fraud and Control Survey, 58% of organizations reported check fraud, which is much higher than reports of ACH or wire fraud. There are things you can do to mitigate the fraud risk from checks, but it’s best to move away from checks whenever possible.
Vendor master records changed and checked each month
When there are edits to vendor master records, they need to be checked and verified. If this isn’t happening for every changed record every month, then your company is exposed to potential fraud. With a built-in self-service portal, like we have in our NextProcess software, established vendors can log in to update their own information if anything changes. This reduces repetitive admin tasks and ensures vendors keep their information current, but it should still be checked by your AP team to ensure accuracy.
Next Steps For Optimizing AP Processing
The next steps for optimizing AP processing will depend on what you find during your investigation. A company that has digitized but not automated most processes will benefit from further automation. A company that has automated every step of AP invoice intake and processing but still processes payments manually will benefit from automating payments processing.
Automated accounts payable software streamlines and standardizes your company’s AP process, reducing costs and providing improved visibility into invoice processing. Then, embedded payments processing provides a quick, easy, reliable, and secure way to issue payments to your vendors and suppliers using card, ACH, or check. Here’s how it works when you implement NextProcess AP and payments software.
First, an invoice enters the system, and automated approval workflows and PO matching features enable seamless, no-touch processing for most invoices. For invoices that cannot be automatically processed, the software consolidates data anomalies and empowers the AP team to resolve exceptions quickly and efficiently.
You can customize the software system to automatically enforce company policy for both processing and approvals. The software also “learns” your preferences the more you use it, making it increasingly efficient.
Finally, NextProcess’s Payment software ensures timely, accurate, and secure supplier payments using ACH, wire transfer, virtual credit cards, or check printing. You’ll customize the NextProcess system for invoices and payment processing according to your company’s rules, including which payments require approval from the finance team and what payment types to use for different payments.
Schedule A Custom Demo
If you’re ready to take the next steps toward making the AP department truly efficient and supporting your finance team with the best tools for the job, contact NextProcess today. Tell us about your current workflow, pain points, goals, and existing software stack. We’ll shape the conversation around your company’s needs, including a customized demo showing how our software can help your finance team.
