2022

BENCHMARKING
REPORTS

Accounts Payable
Performance

Royce Grayson Morse, IOFM Managing Editor

 ACCOUNTS PAYABLE PERFORMANCE

TABLE OF CONTENTS

Introduction........................................................................................................................................4

Compliance.........................................................................................................................................5

Invoice Volume Profiles......................................................................................................................6

Efficiency............................................................................................................................................8

Effectiveness....................................................................................................................................16

Takeaways........................................................................................................................................24

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 ACCOUNTS PAYABLE PERFORMANCE

TABLE OF FIGURES

FIGURE 1. Unclaimed Property Audits.............................................................................................5

FIGURE 2. Comfort with 1099 Reporting Changes..........................................................................6

FIGURE 3. Invoice Volume by Number of FTEs................................................................................6

FIGURE 4. Invoice Volume by Organizational Structure..................................................................7

FIGURE 6. Straight-Through Processing, by Invoice Volume..........................................................9

FIGURE 7. Straight-Through Processing, by Organizational Structure...........................................9

FIGURE 8. PO Invoices Paid on Time, All Respondents................................................................10

FIGURE 9. PO Invoices Paid on Time, by Invoice Volume.............................................................11

FIGURE 10. PO Invoices Paid on Time, by Organizational Structure............................................11

FIGURE 11. Non-PO Invoices Paid on Time, All Respondents......................................................12

FIGURE 12. Non-PO Invoices Paid on Time, by Invoice Volume...................................................13

FIGURE 13. Non-PO Invoices Paid on Time, by Organizational Structure....................................13

FIGURE 14. Days Payables Outstanding, All Respondents...........................................................14

FIGURE 15. DPO by Invoice Volume...............................................................................................15

FIGURE 16. DPO by Organizational Structure................................................................................15

FIGURE 17. Percentage of Duplicate Payments, All Respondents...............................................16

FIGURE 18. Percentage of Duplicate Payments by Invoice Volume.............................................17

FIGURE 19. Percentage of Duplicate Payments by Organizational Structure..............................18

FIGURE 20. PO-to-Invoice Match on the First Try, All Respondents.............................................18

FIGURE 21. PO-to-Invoice Match on the First Try, by Invoice Volume..........................................19

FIGURE 22. PO-to-Invoice Match on the First Try, by Organizational Structure...........................20

FIGURE 23. Transactions Requiring Correction, All Respondents................................................20

FIGURE 24. Transactions Requiring Correction, by Invoice Volume.............................................21

FIGURE 25. Transactions Requiring Correction, by Organizational Structure..............................21

FIGURE 26. Frequency of Early Pay Discount Program, All Respondents...................................22

FIGURE 27. Percentage of Early Pay Discounts Captured, All Respondents...............................23

FIGURE 28. Early Pay Discounts Captured, by Invoice Volume....................................................23

FIGURE 29. Early Pay Discounts Captured, by Organizational Structure.....................................24

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 ACCOUNTS PAYABLE PERFORMANCE

Introduction

In the second 2022 benchmarking report, we discussed the processes of survey respondents. In this
third and final report, we now turn to AP performance benchmarking results. Here’s where you’ll find a lot
of data that will help you set your course to process improvement.

This year, we opted to provide data based on two main metrics: number of invoices processed annually,
and organizational structure.

Why these criteria? Invoice volume in an important indicator when assessing how your peers do things.
An organization that processes a few thousand invoices a year won’t work to the same metrics or with
the same methods as one that handles over a million does. High-volume organizations also tend to have
different payment terms established with their vendors and more advanced automation tools, out of
simple necessity.

Organizational structure is also a good indicator of how accounts payable teams tend to handle their
tasks. A shared services center typically has more staff that often flexes between tasks. They may
also have different policies and priorities. Decentralized and partially centralized AP organizations
work at least semi-independently of one another and tend to have closer relationships with vendors.
Centralized AP departments, the most common type reported by survey respondents, tend to have
dedicated AP teams that mainly work in a similar fashion. (See Figure 4 in the first report, “The Benefits
of Benchmarking.”)

However, this year, we didn’t attempt to analyze organizations by their level of automation as we did in
2021. There are several reasons for this:

• As we noted in the second 2022 benchmarking report, most organizations already have some sort of
automation in place now, even if it’s only invoice scanning and data capture.

• It is difficult for organizations to accurately rank themselves in terms of how advanced their
automation is.

• The variety of processes and available solutions for AP automation make an accurate comparison
of this nature risky. What one organization may consider advanced automation, another may have
already outgrown.

Likewise, decision-making processes, which we also profiled in the first “Benefits of Benchmarking”
report, tend to be influenced by how AP is structured. While decision-making style was a method by
which we analyzed data in 2021, this is a highly granular and labor-intensive process to accurately
assess. We decided to approach this differently this time by looking at a simpler metric, organizational
structure, which should provide similar insight.

Let’s get into the data. Remember that your best metrics will come from organizations as close to yours
as possible.

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 ACCOUNTS PAYABLE PERFORMANCE

Compliance

We asked survey participants whether they have ever experienced an unclaimed property audit. Only
one in five respondents replied in the affirmative. The responses to our question about any associated
fines and penalties did not yield enough responses to be statistically meaningful. And while our question
about the lookback period in years also did not yield many responses, a third of those who did answer
noted their audits extended back 10 years or even longer.

FIGURE 1. UNCLAIMED PROPERTY AUDITS

Respondents Who Have Experienced an Unclaimed Property Audit

20%

80%

No
Yes Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 255

As IOFM has noted previously, states have been cash-strapped recently and this problem may increase
due to the predicted economic recession. In that event, additional unclaimed property audits may be in
the offing as states look to bolster their revenues.

We also asked survey participants to tell us how comfortable they were with the recent changes in IRS
1099 form reporting. Beginning in tax year 2020, non-employee compensation was moved from the
1099-MISC form to 1099-NEC. There was considerable confusion at the time about what amounts were
to be reported on which form and in which box — and some of that confusion still exists.

Figure 2 tells the story: About a third of respondents said they are now very comfortable with those
changes. More than four out of 10 said they’re getting there but are still in learning mode, and five
percent said they are still uncomfortable with the new standards for 1099 reporting.

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 ACCOUNTS PAYABLE PERFORMANCE

FIGURE 2. COMFORT WITH 1099 REPORTING CHANGES

Level of Comfort With Recent 1099 Changes

43%

32%

21%

5%

Very comfortable Somewhat comfortable, Uncomfortable Don’t know

still learning or does not apply
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

Invoice Volume Profiles

The first metrics we should consider involve the relationship between invoice volume as a function of
organizational structure and number of employees.

Figure 3 shows invoice volumes as they correlate to the number of full-time employees or equivalents.
As would be expected, smaller organizations with five FTEs or fewer typically process less than 50,000
invoices a year. Large organizations with more than 20 FTEs process far more: a third handle over a
million invoices each year, and nearly half process between 100,000 and a million.

FIGURE 3. INVOICE VOLUME BY NUMBER OF FTES

Invoice Volume by Number of Full Time Employees

12% 3% 8%
32%
20% 41%
45%

47%
29%
69%
> 1 million
34%
100,000 – 1 million
26% 13%
50,000 – 99,999
13% 7%
< 50,000
0–5 6 – 10 11 – 20 More than 20
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 311

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 ACCOUNTS PAYABLE PERFORMANCE

Organizational structure is also related to invoice volume. Shared services centers, in which accounts
payable is rolled into other support functions like accounts receivable, purchasing, finance, even human
resources or other “back office” responsibilities, tend to have the highest volumes of invoices. Two-
thirds of SSCs process 100,000 invoices or more a year. This only makes sense, given that high-volume
organizations are looking for a more streamlined, consolidated approach to support functions.

More than half of centralized organizations, which represented the highest share of respondents (see
Figure 4 in the first report, “The Benefits of Benchmarking”), reported they process fewer than 50,000
invoices a year.

FIGURE 4. INVOICE VOLUME BY ORGANIZATIONAL STRUCTURE

Invoice Volume by Organizational Structure

3% 6% 3%
20% 21%
22%
31%

30% 20%
41%
27%

55% 18%
> 1 million 48%
100,000 – 1 million
37%
50,000 – 99,999 20%
< 50,000
Decentralized Partially centralized Centralized, not shared Shared services center
services
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 311

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Efficiency

Efficiency is a measure of how quickly the work is done with a minimum of effort.

One of the best efficiency measures is straight-through processing; that is, how frequently invoices
are processed from beginning to end without manual intervention.

Of course, this is largely dependent upon the degree of automation in use. Figure 5 shows the
aggregated responses of all survey participants. Only about one in 10 said this occurs more than
90 percent of the time; nearly half report it happens less than 50 percent of the time.
FIGURE 5. STRAIGHT-THROUGH PROCESSING, ALL RESPONDENTS

Percentage of Invoices With Straight – Through Processing

(All Respondents)
46%

18%
15%
11% 10%

91 –100% 76 –90% 50 – 75% < 50% Don’t know

of N/A
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 258

When we consider straight-through processing as a function of invoice volume, we see that high-volume
organizations with more than a million annual invoices do best. Nearly one in five respondents report that
they are able to process more than 90 percent of their invoices touch-free.

Only one in ten of the other survey participants are able to do so; about half can manage straight-
through processing less than half the time, and presumably some are unable to do it at all.

As mentioned above, automation plays a significant role in how much handling invoices require.
High-volume organizations tend to have more robust end-to-end automation, which enables them to
be more efficient.

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FIGURE 6. STRAIGHT-THROUGH PROCESSING, BY INVOICE VOLUME

Percentage of Invoices With Straight Through Processing

– by Invoice Volume
11.1% 9.4% 10.8%
19.0%
11.3% 11.8%
14.8%
15.1% 5.9%
12.3%
38.1%

34.0% 50.0%
14.3% 54.3%
91 - 100%
76 - 90% 19.0%
50 - 75% 30.2%
< 50%
21.6%
Don’t know or N/A
9.5% 7.4%
More than 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than 50,000
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

When considering the straight-through processing metric as a function of organizational structure,

the results are similar. Shared services centers, generally high-volume processors, are better able to
consistently pay invoices straight-through. The other three organization types are fairly consistent with
one another, with 10 percent or fewer respondents saying they are able to pay straight-through more
than 90 percent of the time.

FIGURE 7. STRAIGHT-THROUGH PROCESSING, BY ORGANIZATIONAL STRUCTURE

Percentage of Invoices With Straight Through Processing

– by Organizational Structure
2.8% 9.8% 9.8%
16.7% 17.7%
14.6% 13.7%
8.3% 2.4% 15.2%
9.8%
16.5%
52.8% 51.2%
47.1%

91 - 100% 38.0%
76 - 90%
50 - 75%
< 50% 19.4% 22.0% 19.6%
12.7%
Don’t know or N/A
Decentralized Partially Centralized Shared Services
Centralized Center
Source:IOFM 2022 Accounts Payable Benchmarking Survey, n = 258

While straight-through processing is an important internal measure of efficiency, paying on time also has
an external impact on vendor relationships.

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 ACCOUNTS PAYABLE PERFORMANCE

We queried respondents about their success in paying PO-based invoices on time. Fewer than four
percent of participants say they can do this all the time; slightly more than this said they are unable to
do this even half the time. Of course, this process requires PO-to-invoice matching, a metric that will
be discussed in the effectiveness section below.

FIGURE 8. PO INVOICES PAID ON TIME, ALL RESPONDENTS

PO Invoices Paid on Time

27.7%

23.0%
20.7%
18.8%

5.9%
3.9%

100% 91 – 99% 81 – 90% 50 – 80% < 50% Don’t know

of N/A
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 256

Taking a look at PO invoices paid on time as a function of invoice volume, we see that larger
organizations are able to do this all the time more often than their smaller counterparts. However,
smaller organizations do somewhat better if you look at the aggregated data for those who pay on
time with 90 percent or higher frequency.

Interestingly, high volume organizations also exhibit the worst performance of any of the groups,
with one in seven of those respondents saying they pay fewer than half of their PO invoices on time.
However, this may be due to reasons other than lack of efficiency, including matching issues, receiving
discrepancies or other such problems that may occur more often in large companies.

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FIGURE 9. PO INVOICES PAID ON TIME, BY INVOICE VOLUME

PO Invoices Paid on Time

– by Invoice Volume
3% 4% 4%
10%
18%
10% 21% 26%

25%
38% 28% 16%

23% 18%
13%
19% 4% 5%
100% 6%
91 - 100%
76 - 90%
14% 30% 32%
50 - 75% 26%
< 50%
Don’t know or N/A
10%
More than 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than 50,000
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 255

When looking at PO invoices that are paid on time as broken out by organizational structure, we see that
decentralized organizations do somewhat better compared to their counterparts. This may be due to
the fact that decentralized AP organizations tend to work with a select group of vendors and are more
closely involved with them, making matching and payment a less error-prone process.

FIGURE 10. PO INVOICES PAID ON TIME, BY ORGANIZATIONAL STRUCTURE

PO Invoices Paid on Time

– by Organizational Structure
3% 8% 5% 1%
10% 18% 24%
33%
33% 20%
27%
14%
21%
100% 19% 20% 15%
91 - 99% 7% 6%
81 - 90% 8%
50 - 80% 30% 30% 27%
< 50% 22%
Don’t know or N/A
Decentralized Partially centralized Centralized Shared Services
Center
Source:
IOFM 2022 Accounts Payable Benchmarking Survey, n = 256

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How do non-PO invoices stack up?

Almost five percent of total survey participants said they paid all non-PO invoices on time. Almost a third
say they pay more than 90 percent of their non-PO invoices within terms. A bit more than five percent of
all respondents are unable to pay more than half their invoices on time.

FIGURE 11. NON-PO INVOICES PAID ON TIME, ALL RESPONDENTS

Non-PO Invoices Paid on Time

(All Respondents)
30.4%

21.4%
18.7% 19.5%

4.7% 5.4%

100% 91 – 99% 81 – 90% 50 – 80% < 50% Don’t know

of N/A
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

Considering payment promptness for non-PO invoices correlated to invoice volume, we see that this
poses the greatest challenge for high-volume organizations. This is likely because these invoices
require research to determine approvers and get their sign-off, which may be more difficult in large
organizations.

Smaller organizations than rely less on POs appear to have processes more tailored to this type of
transaction.

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FIGURE 12. NON-PO INVOICES PAID ON TIME, BY INVOICE VOLUME

Non-PO Invoices Paid on Time

– by Invoice Volume
5% 8% 4% 3%
19%
23% 32% 37%

24%
21% 15%
18%
100% 24% 15%
25% 2%
91 - 99% 22%
81 - 90%
6% 3%
50 - 80% 24% 32%
< 50% 18% 18%
Don’t know or N/A 5%
More than 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than 50,000
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 256

We also see that same issue for shared services centers that tend to handle larger numbers of invoices
and are typically more automated. They seem to have somewhat greater challenges in paying non-PO
invoices on time.

FIGURE 13. NON-PO INVOICES PAID ON TIME, BY ORGANIZATIONAL STRUCTURE

Non-PO Invoices Paid on Time

– by Organizational Structure
6% 3% 3%
12%
25%
31% 37%
24%

20%
14%
24% 17%
20%
100% 28% 21%
91 - 99% 20% 9%
81 - 90% 3% 2% 5%
50 - 80%
< 50% 19% 17% 18% 23%
Don’t know or N/A
Decentralized Partially centralized Centralized Shared Services
Center
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

DPO (day payables outstanding) is a metric often used in finance to describe the organization’s cash
position relative to outstanding invoices vs. cost of goods sold or sales within a specific time period.

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Rather than simply being a measure of how quickly you pay, it is a ratio that reveals working capital.
While many accounts payable organizations don’t themselves track DPO or use it as a measure of their
efficiency, it may be that those in the finance department are using AP-supplied information for the
purposes of forecasting and reporting with DPO metrics.

This is reflected in the responses of over a third of survey participants, who said they don’t know or
track their DPO statistic.

FIGURE 14. DAYS PAYABLES OUTSTANDING, ALL RESPONDENTS

Days Payables Outstanding (DPO)

(All Respondents)
37%

16% 16%
11%
8% 8%
4%

0 – 10 days 11 – 20 days 21 – 30 days 31 – 45 days 46 – 60 days More than I don’t know

60 days or N/A
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

Looking at the survey results for DPO calculated against invoice volume, we see a couple of revealing
things. First, higher volume organizations seem to stretch their payments for a longer period than smaller
ones. Presumably, they have the financial leverage to do so with their suppliers. Smaller organizations
tend to pay more quickly, as we have seen.

Secondly, high volume AP organizations tend to be more attuned to what their DPO actually is.

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FIGURE 15. DPO BY INVOICE VOLUME

DPO by Invoice Volume

5% 5%
11%
10% 9% 18%
9%
10% 12% 7%
17%
15% 19%
33%
11%
14%
6% 15%
5% 7%
5%
0 - 10 days
2%
14%
11 - 20 days
21 - 30 days 45%
31 - 45 days 38% 35%
46 - 60 days 24%
More than 60 days
Don’t know, or N/A
More than 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than
50,000
Source:IOFM 2022 Accounts Payable Benchmarking Survey, n = 256

This distinction isn’t as clear-cut when considering DPO as a function of organizational structure.
While we still see similar trending for shared services centers with presumably higher volume than
many of their counterpart organizations, the metrics are more similar among the various categories.
It’s also worth noting that over a third of respondents in all categories either don’t know or don’t track
their DPO metric.

FIGURE 16. DPO BY ORGANIZATIONAL STRUCTURE

DPO by Organizational Structure

6%
14% 15% 13%
9%
7% 7%
11%
15%
7%
19%
17%
15% 14%

14% 18%
12% 10%
6% 5%
2% 12%
0 - 10 days
11 - 20 days
21 - 30 days 44%
39% 37%
31 - 45 days 33%
46 - 60 days
More than 60 days
Don’t know, or N/A
Decentralized Partially centralized Centralized Shared Services
Center
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

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Effectiveness

Now let’s turn our attention to effectiveness measurements. While efficiency involves doing things
quickly with a minimum of expenditure of effort and time, effectiveness involves doing them correctly.
For accounts payable, this generally means getting things right on the first attempt.

Of course, it’s a balance. To determine which set of metrics you should address first, consider
whether your biggest immediate issues have to do with speed or accuracy. If your answer is accuracy,
effectiveness is the place to begin your process improvement effort.

Let’s start by taking a look at duplicate payments. This is a major issue, since paying the same invoice
more than once means a financial loss to the company if the extra payment can neither be retrieved or
applied to another invoice. Either way, this process will take time communicating with the vendor and
trying to resolve the issue.

More than half of survey participants report that less than one percent of their payments are duplicates.
About another fourth indicate their duplicate payments amount to less than three percent of their total.
While this may seem like a small metric, for large organizations with sizable payments and high volumes,
even a small percentage can amount to a lot of money paid in error.

FIGURE 17. PERCENTAGE OF DUPLICATE PAYMENTS, ALL RESPONDENTS

Percentage of Duplicate Payments

52.7%

16.7% 16.3%

7.8% 6.6%

< 1% 1 – 1.9% 2 – 2.9% 3% + Don’t know

Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 258

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 ACCOUNTS PAYABLE PERFORMANCE

Figure 18 shows an interesting split of duplicate payments based on invoice volumes. Those working
with fewer than 50,000 invoices a year do the best at keeping duplicates to a minimum. This may be
because they tend to use manual processes, and in small departments, people remember who’s been
paid already and who hasn’t.

On the other hand, high-volume organizations also do a reasonably good job of avoiding duplicate
disbursements, presumably because they have more automation to help them.

FIGURE 18. PERCENTAGE OF DUPLICATE PAYMENTS BY INVOICE VOLUME

Percentage of Duplicate Payments

– by Invoice Volume
14% 10%
19% 4%
26%
10% 9%
7%
10% 7% 9% 14%
10% 6%
27% 9%

64%
57%
Don’t know 49%
3% +
40%
2 - 2.9%
1 - 1.9%
< 1%

> 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than

50,000
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

Decentralized organizations do the best in terms of keeping duplicate payments to a minimum, with
nearly two-thirds of respondents reporting them occurring at a rate of less than one percent. This may be
because decentralized AP departments work with a specific catalog of suppliers they are familiar with,
affording less opportunity for error.

Organizations with different structures are fairly consistent, with about half of all of them reporting they
make duplicate payments less than one percent of the time.

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 ACCOUNTS PAYABLE PERFORMANCE

FIGURE 19. PERCENTAGE OF DUPLICATE PAYMENTS BY ORGANIZATIONAL STRUCTURE

Percentage of Duplicate Payments

– by Organizational Structure

17% 13% 19%

20%
5%
8% 5% 5%
6% 12%
13%
8% 7% 23%
15% 14%

Don’t know 61% 55%

3% + 46% 49%
2 - 2.9%
1 - 1.9%
< 1%
Decentralized Partially Centralized Shared Services
Centralized Center
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 258

PO-to-invoice matching is an effectiveness metric that also impacts efficiency, as mentioned previously.
Getting this right on the first attempt allows for more timely processing and less wasted effort trying to
resolve mismatch issues.

Only five percent of survey respondents stated they are always accurate with matching. Another fourth
are accurate 90 percent or more often, and nearly another fourth are only accurate between 50 and 80
percent of the time.

FIGURE 20. PO-TO-INVOICE MATCH ON THE FIRST TRY, ALL RESPONDENTS

PO-to-Invoice Match on the First Try

(All Respondents)
33%

24%

14% 12% 12%

5%

100% 91 – 99% 81 – 90% 50 – 80% < 50% Don’t know

of N/A
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

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mechanical, without prior written permission of the Institute of Finance & Management.
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 ACCOUNTS PAYABLE PERFORMANCE

Looking at PO-to-invoice matching success as a function of invoice volume, again we see that smaller
organizations tend to do a better job overall, perhaps because of their manual processes and the
knowledge residing in the heads of a small AP staff.

Larger organizations struggle somewhat, with about three in 10 reporting they are only able to get a
first-try match less than half the time.

FIGURE 21. PO-TO-INVOICE MATCH ON THE FIRST TRY, BY INVOICE VOLUME

PO-to-Invoice Match on the First Try

– by Invoice Volume
5% 1% 6% 7%
13%
9%
24% 20%
11%
15%
9%
24% 31% 21%
20%
9%
10%
14%
29%
100%
91 - 99%
81 - 90% 40% 35%
50 - 80%
30%
< 50%
19%
Don’t know or N/A
More than 1 million 100,000 –1 million 50,000 – 99,999 Fewer than 50,000
Source:IOFM 2022 Accounts Payable Benchmarking Survey, n = 256

This same hypothesis seems to be borne out when looking at the match rate based on how AP is
structured. Shared services centers, typically with more staff and higher invoice volumes, tend to have
greater difficulty getting a first-try match.

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 ACCOUNTS PAYABLE PERFORMANCE

FIGURE 22. PO-TO-INVOICE MATCH ON THE FIRST TRY, BY ORGANIZATIONAL STRUCTURE

PO-to-Invoice Match on the First Try

– by Organizational Structure
8% 8% 4% 3%
10% 16% 14%
11%
6% 15%
19% 18%
25%
14% 18%
30%
11% 8% 16%
100% 11%
91 - 99%
81 - 90%
36% 40% 34%
50 - 80% 27%
< 50%
Don’t know or N/A
Decentralized Partially centralized Centralized Shared Services
Center
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 257

Going back and fixing transaction data after it’s entered is the enemy of effectiveness. It takes time,
effort and rework.

More than three-fourths of all survey participants report they only have to do this for a maximum of
one in 10 invoices, often less.

FIGURE 23. TRANSACTIONS REQUIRING CORRECTION, ALL RESPONDENTS

Transactions Requiring Correction

(All Respondents)
54%

22%

9% 7% 8%

0 – 5% 0 – 5% 11 – 15% 16 – 20% > 20%

Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 254

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 ACCOUNTS PAYABLE PERFORMANCE

Again, the small AP departments outperformed the large ones by almost double. About two-thirds of
those processing fewer than 50,000 transactions a year had to correct five percent or fewer of them.
Only a third of the largest departments with a volume of a million or more reported this success rate.

FIGURE 24. TRANSACTIONS REQUIRING CORRECTION, BY INVOICE VOLUME

Transactions Requiring Correction

– by Invoice Volume

33%
44%
59% 63%
24%
25%
10%
0 - 5% 18%
6 - 10% 22%
24% 16% 4%
11 - 15%
12% 5%
16 - 20% 6% 3%
> 20%
10% 8% 8% 8%
More than 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than 50,000
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 253

Shared services centers — typically high volume departments — reflected this trend, with their
correction rate exceeding that of other departmental structures.

FIGURE 25. TRANSACTIONS REQUIRING CORRECTION, BY ORGANIZATIONAL STRUCTURE

Transactions Requiring Correction

– by Organizational Structure

39%
61% 56% 62%

27%
0 - 5% 20%
6 - 10%
19% 20% 12%
11 - 15%
11% 12% 4% 10%
16 - 20% 3% 7% 7%
> 20% 6% 5% 7% 12%
Decentralized Partially centralized Centralized Shared services center
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 254

Early pay discounts can enable AP to contribute to the organization’s bottom line — provided they can
be captured.

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 ACCOUNTS PAYABLE PERFORMANCE

We first asked respondents whether they have some sort of early pay discount arrangement with their
vendors. Nearly three-quarters do.

FIGURE 26. FREQUENCY OF EARLY PAY DISCOUNT PROGRAM, ALL RESPONDENTS

Does Your Organization Have a Formal Early Pay Program?

28%

72%

No
Yes Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 256

How effective are respondents at capturing those discounts? Of those that have such a program and
know its success rate, nearly a fourth capture those discounts more than half the time. About one in four
are able to obtain then less than five percent of the time.

Of course, the benefits of any discount program must be weighed against the cost of retaining the
cash. That’s a calculation that should be done in coordination with the finance department. It may be
that it benefits the company more not to try to capture the discount. However, it also calls into question
whether it may be time to renegotiate the fast pay program percentage, especially given the expected
economic recession.

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mechanical, without prior written permission of the Institute of Finance & Management.
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 ACCOUNTS PAYABLE PERFORMANCE

FIGURE 27. PERCENTAGE OF EARLY PAY DISCOUNTS CAPTURED, ALL RESPONDENTS

Percentage of Early Pay Discounts Captured

(All Respondents)
43.1%

22.9%
18.2%

7.1%
3.6% 5.1%

> 50% 31 – 50% 16 – 30% 5 – 15% < 5% Don’t know

or N/A
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 253

Here, mid-volume AP departments did a somewhat better job of capturing discounts than their
counterparts on either end of the spectrum. Taken together, about a fourth of respondents in those
middle brackets reported they are able to capture more than half of available discounts.

FIGURE 28. EARLY PAY DISCOUNTS CAPTURED, BY INVOICE VOLUME

Early Pay Discounts Captured

– by Invoice Volume

15% 19%
21%
32%
15% 5%
8% 5%
6% 2%
10% 8%
1% 8%
6% 25%
10%
25% 13%

> 50%
31 - 50% 48% 45%
41%
16 - 30% 35%
5 - 15%
< 5%
Don’t know or N/A
More than 1 million 100,000 – 1 million 50,000 – 99,999 Fewer than 50,000
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 252

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mechanical, without prior written permission of the Institute of Finance & Management.
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 ACCOUNTS PAYABLE PERFORMANCE

Organizational structure, however, doesn’t appear to make much difference when it comes to overall
discount capture. Centralized AP departments did somewhat better; decentralized did the worst,
although this may be because they don’t often engage in such programs or else respondents were
unable to report the metrics. Partially centralized and shared services centers had similar profiles.

FIGURE 29. EARLY PAY DISCOUNTS CAPTURED, BY ORGANIZATIONAL STRUCTURE

Early Pay Discounts Captured

– by Organizational Structure

17% 20% 26% 23%

6%
3% 10% 5%
8% 4%
19% 8%
6% 10%
1%
23% 21% 12%

> 50%
31 - 50% 56%
16 - 30% 40% 45%
38%
5 - 15%
< 5%
Don’t know or N/A
Decentralized Partially Centralized Shared Services
Centralized Center
Source: IOFM 2022 Accounts Payable Benchmarking Survey, n = 253

Takeaways

While benchmarking makes extensive use of data collected from other organizations, remember that it
is also a process that must be customized to your operation.

Your resources, your level of automation, your staff, your organizational structure, your policies and
your upper management directives must all factor in. It’s important to keep in mind that:

• You should start with one or two benchmarking process improvement projects at a time,
as your schedule permits

• Choose the metrics that will give you the most benefit the fastest

• Understand that benchmarking is not a “one and done” consideration — you may need several
rounds of process improvement to get where you want to be

• Even when you achieve that goal, you will want to recalibrate your goals based on how your
organization has changed or to make further progress

Finally, remember that benchmarking helps show you what you can achieve. How you get there is
up to you.

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mechanical, without prior written permission of the Institute of Finance & Management.
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 ACCOUNTS PAYABLE PERFORMANCE

About the Institute of Finance & Management

Accounting and finance professions have each undergone nothing short of a complete
transformation since the Institute of Finance and Management (IOFM) was founded in 1982
and since then our mission has been, and continues to be, to align the resources, events,
certifications, and networking opportunities we offer with what companies need from the
accounting and finance functions to deliver market leadership. IOFM empowers accounting and
finance professionals to maximize the strategic value they offer their employers.

Our enduring commitment to serving the accounting and finance professions is unmatched.
IOFM has certified over 25,000 accounting and finance professionals and serves several
thousand conference and webinar attendees each year.

IOFM is proud to be recognized as the leading organization in providing training, education

and certification programs specifically for professionals in accounts payable, procure-to-pay,
accounts receivable and order-to-cash, as well as key tax and compliance resources for global
and shared services professionals, controllers, and their finance and administration (F&A) teams.

Learn more at IOFM.com

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