How to set up accounts payable goals (With examples)

Do you want to improve efficiency and reduce costs in your accounts payable (AP) department? While those are respectable objectives, they might be tough to achieve without clearly defined goals.

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Taking a strategic approach to setting AP goals can transform your department from a cost center into a value driver by boosting cash flow, strengthening vendor relationships, improving compliance, and contributing to business growth.

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So let’s walk through how to choose the right AP goals and how to set yourself up to achieve them. Plus, if you need guidance on where to start, we’ll also give a few examples of AP goals and their potential impact.

Choosing the right accounts payable goals

First, you need to set the right goals. When your AP goals align with overall business objectives, that synergy can positively impact cash flow, reduce unnecessary expenses, and improve key performance indicators (KPIs) like invoice processing time and accuracy rates.

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Here are a few common goals for any accounts payable department:

• Reduce cost per invoice: Lowering the cost to process each invoice can free up budget for strategic initiatives. Automation minimizes manual labor, reduces errors, and cuts down on administrative expenses.
• Increase efficiency: When was the last time you updated your AP processes? Not just a tweak here or there, but a true overhaul of what you do, when you do it, and who’s responsible? Streamlining AP approvals, payments, and reconciliations lets your team focus on higher-value tasks.
• Reduce invoice cycle time: Shortening the time to process invoices from receipt to payment helps optimize working capital and avoid penalties. 
• Improve vendor relationships: Timely and accurate payments strengthen vendor relationships. It might even get you better terms and potential discounts because vendors are more likely to offer favorable terms to reliable payers.
• Improving accuracy: How much time do you waste correcting errors, dealing with irritated vendors, or re-processing payments? Reducing data entry and payment processing errors helps avoid costly rework, duplicate payments, and compliance risks.

How to set up accounts payable goals

Once you identify your AP goals, take a structured approach to achieve them. Here’s how to do it:

Step 1: Assess your current AP performance

Dan Sullivan, an expert on entrepreneurship and founder of Strategic Coach, said, “All progress begins by telling the truth.”

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In other words, you need to know where you are now to get where you want to be. Look at your current AP performance metrics to get a baseline for processing costs, frequency of late payments, invoice cycle time, error rates, or late fees. This baseline assessment sets the foundation for measuring progress.

Step 2: Define clear, measurable objectives

Once you understand your current AP performance, establish specific objectives using the SMART goal framework.

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SMART goals are specific, measurable, achievable, relevant, and time-bound. 

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For example, instead of deciding you want to “improve efficiency,” set a goal to “reduce invoice cycle time by 20% within six months.” This SMART goal is clear and promotes accountability, making it easier to track progress.

Step 4: Create your action plan

Once you set your goals, create a step-by-step plan to achieve them. Break down the goal into actionable steps, assign responsibilities, and set milestones to monitor progress along the way.

Step 5: Monitor, evaluate, and adjust

Track your progress using the same KPIs you used in Step 1. Use this data to assess whether you’re on track to meet your goals. Make sure you’re reviewing your progress regularly—at least once a month. That way, you can make adjustments as needed.

Examples of accounts payables goals and their impact

To help you better understand how to implement and achieve your AP goals, let's look at detailed examples for each potential AP goal we covered earlier. These examples show each goal in action and the steps to achieve it.

Reducing cost per invoice

Say you’re a mid-sized company processing 1,000 invoices per month. Each invoice costs $15 to process, including labor, paper, and storage. Your goal is to reduce this cost by 30% within a year.

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Here are some steps to achieve that goal:

• Implement AP automation software to reduce manual data entry and approval time
• Shift to electronic invoicing and payments to minimize paper and postage expenses
• Consolidate vendor payments to reduce processing fees and banking costs

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The result? Lower processing costs free up room in the budget for strategic initiatives, improve overall financial efficiency, and reduce reliance on manual labor.

Increasing efficiency

Say your organization has a backlog of invoices, and your AP team is burnt out from working long hours. You want to improve AP efficiency by increasing invoice processing speed from 10 invoices per hour to 20 within six months.

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Here’s how you do it:

• Standardize invoice submission by implementing an electronic portal for vendors
• Automate invoice approval workflows to eliminate bottlenecks and manual interventions
• Train staff on best practices for using your AP automation technology

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This leads to faster processing times and gives your team back work/life balance. It also improves job satisfaction because people spend less time on routine manual processes and more time on strategic initiatives.

Reducing invoice cycle time

Your business currently takes an average of 25 days to process an invoice. You want to reduce it to 15 days within the next 90 days.

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To achieve this goal, you:

• Automate invoice matching and approvals to speed up processing times
• Establish clear policies and guidelines to minimize discrepancies and rework
• Regularly analyze cycle time metrics and address process bottlenecks

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By doing so, you’ll have shorter invoice cycle times leading to improved cash flow management, fewer late payment penalties, and increased operational agility.

Improving vendor relationships

You’ve been dealing with frequent vendor complaints about late payments, so you set a goal to improve vendor satisfaction scores by 20% over the next year.

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You do this by:

• Implementing early payments to build goodwill with certain vendors and potentially secure discounts
• Automating invoice processing and approvals to ensure accurate and timely payments
• Scheduling regular check-ins with your top vendors to address their concerns and foster better collaboration

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In turn, you’ll gain strengthened vendor relationships resulting in better terms and cost savings through negotiated discounts.

Improving accuracy

Say your AP team has a 5% error rate in invoice processing. You want to reduce errors to below 1% within six months.

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Here’s how you achieve it:

• Leverage AI data capture to minimize manual entry errors
• Introduce automated validation checks to flag inconsistencies before processing
• Regularly audit payments to identify common errors and implement corrective measures
• Train your staff to ensure they understand processes

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This payoff leads to improved accuracy that reduces costly rework, improves financial reporting, and minimizes the risk of compliance issues.

How AP automation helps teams reach their AP goals: Ramp’s proven success stories

Accounts payable automation can improve your team’s chances of achieving its AP goals. Automating repetitive tasks, reducing manual errors, and providing real-time insights lets your team focus on analysis and other strategic initiatives rather than getting bogged down by manual processes. 

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Of course, transitioning to automated systems—especially AI tools—can seem overwhelming. To help you overcome the mental hurdle, here’s a real-world example of how Ramp’s AP automation helped a company streamline its operations and meet its AP objectives.

How Precision Neuroscience streamlined systems and reduced data entry

Precision Neuroscience’s fragmented procurement process required extensive manual data entry, so it was inefficient and error-prone. Implementing Ramp's integrated platform allowed the company to consolidate multiple tools into a single system and automate data capture. 

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Brian Lautenbach, Precision Neuroscience’s Financial Controller, found Ramp's optical character recognition (OCR) technology particularly beneficial because it automatically extracted information from documents and minimized manual data entry.

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With Precision Neuroscience’s transition to Ramp, we helped them:

• Accelerate its procurement process by 50%
• Reduce manual data entry and error rates
• Cut the month-end close time to just 1 to 2 days
• Improve operational efficiency and allow the team to focus on more strategic tasks

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Precision Neuroscience’s success shows that while the leap to AI-driven AP automation may seem intimidating, a user-friendly and highly effective solution like Ramp can help your team achieve its AP goals efficiently.

Achieve your AP goals with Ramp

Setting up and achieving your accounts payable goals can help you improve efficiency, reduce costs, strengthen vendor relationships, and transform AP from a back-office function into a key driver of business success.

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Ramp accounts payable software can help you reach your goals faster. Our intuitive platform streamlines your AP processes, minimizes errors, and provides real-time visibility to keep your payables on track.

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Key features include:

• Automated invoice processing: Ramp’s OCR captures invoice data and codes transactions to reduce manual data entry.
• Customizable approval workflows: With Ramp, you can build smart approval workflows and get alerts for errors or overbilling.
• Real-time spend insights: Ramp integrates with your accounting software or ERP, giving visibility into your AP operations.

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Ready to take your AP processes to the next level? Schedule a demo today to learn how Ramp can help you achieve your AP goals.