10 accounts payable metrics to measure with examples

Managing invoices, payments, and vendor relationships is a constant balancing act. Without the right systems in place, staying on top of everything can quickly become overwhelming.
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Tracking the right metrics can make this process a lot easier. By focusing on specific accounts payable metrics, you can gain insights that help streamline operations and save money.
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Let's dive into what accounts payable metrics are and why they matter.

What are accounts payable metrics?

They help businesses track invoice processing times, payment accuracy, and vendor relationships to identify areas for improvement.

Managing AP involves multiple steps—from processing invoices to managing cash flow—making it difficult to spot inefficiencies without clear metrics. Tracking the right AP metrics provides visibility into bottlenecks, reduces costs, and helps streamline financial operations.

A strong AP automation system should not only improve these metrics but also provide built-in tracking tools to measure performance and drive continuous improvement.

What are the 3 main categories of accounts payable metrics?

AP metrics fall into three key categories, each offering insight into different aspects of your accounts payable process:

• Operational metrics: Measures AP efficiency by tracking how quickly and accurately invoices are processed. These include invoice processing time and invoices processed per full-time employee.
• Financial metrics: Assesses the cost-effectiveness of AP processes, helping businesses optimize cash flow. Key examples include average cost per invoice, early payment discounts captured, and late payment penalties incurred.
• Supplier metrics: Evaluates vendor relationships and payment reliability, ensuring smooth operations. This includes supplier inquiries and disputes as well as payment terms compliance.

Monitoring these categories gives businesses a complete picture of AP performance, allowing for smarter financial decisions and more efficient operations.

10 accounts payable metrics every team should track with examples

1. Average cost per invoice

Tracking your average cost per invoice gives you a clear picture of how much your business spends to process each invoice—from labor and software to transaction fees and operational overhead. The lower this cost, the more efficient your AP function becomes.

To calculate it, divide your total invoice processing costs by the number of invoices processed in a given period.

For example, if your company processes 1,000 invoices per month at a total cost of $10,000, the average cost per invoice is $10.

Though it depends, the average cost per invoice is impacted by the following criteria:

• Labor costs: Time employees spend on invoice processing, approvals, and error resolution.
• Operational overhead: Printing, postage, and other costs related to manual invoice processing.
• Transaction fees: ACH, wire transfers, credit card payments, and other payment methods may carry additional costs.
• Software expenses: The price of AP automation tools and any other accounting software used.

Companies that use invoice automation software often see a significant reduction in cost per invoice, leading to significant savings.

2. Average invoice processing time

The average invoice processing time measures how long it takes for an invoice to move from receipt to payment. The faster the process, the more efficient your AP function. The average invoice processing time is affected by:

• Approval bottlenecks
• Manual data entry process
• Potential invoice discrepancies
• Payment method speed

A shorter processing time improves cash flow, strengthens vendor relationships, and reduces late payment risks.

To calculate the average invoice processing time, use the following formula:

For example, if your AP team processes 100 invoices in a total of 1,000 days, your average processing time is 10 days. However, let’s say that industry benchmarks hover around 5 days for average processing time. Then that means there’s room for improvement.

3. Percentage of invoices processed straight-through

Straight-through processing (STP) refers to invoices that go from receipt to payment without manual intervention. A higher percentage means fewer errors and less manual work.

To calculate it, you’ll use the following formula:

For example, if 7,000 out of 10,000 invoices are processed without manual touchpoints, your STP rate is 70%. Increasing this percentage leads to faster approvals, lower labor costs, and fewer payment delays.

The factors that influence STP rates include:

• Invoice format: Digital invoices (e-invoices, XML, or EDI) process faster than PDFs or paper invoices.
• Data accuracy: Clean, structured invoice data reduces exceptions and approvals.
• Automation level: Workflows with AI-powered invoice capture and automated matching improve STP rates.
• Vendor compliance: Suppliers submitting invoices in the correct format with accurate data reduce exceptions.

Companies with high STP rates can reduce processing costs by using AP automation to ensure invoices flow through seamlessly, minimizing human intervention and error risks.

4. Number of invoices processed per full-time employee

This metric measures the productivity of your AP team by tracking how many invoices a single full-time employee (FTE) processes within a given period. A higher number signals greater efficiency, while a lower number may indicate bottlenecks, manual inefficiencies, or the need for process improvements.

The formula you’d use is:

For example, if your AP team of five full-time employees processes 2,500 invoices per month, the average productivity per FTE is 500 invoices per month.

Improving this metric leads to better resource allocation and lower labor costs. But several factors determine how many invoices an employee can process efficiently:

• Level of automation: AI-powered AP automation reduces manual workload, allowing employees to process significantly more invoices.
• Invoice complexity: Standardized, structured invoices move through the system faster than those requiring manual validation.
• Approval workflows: A well-optimized approval process prevents bottlenecks, ensuring invoices move through the system without unnecessary delays.
• Training and system usability: Employees who are well-trained and equipped with intuitive AP tools can process invoices more accurately and efficiently.

5. Invoice exception rate

The invoice exception rate measures the percentage of invoices that require manual intervention due to errors or discrepancies. A high exception rate slows down processing, increases labor costs, and introduces payment delays, making it a key metric for AP efficiency.

To calculate invoice exception rate:

For example, if your team processes 5,000 invoices per month and 500 require manual intervention, your invoice exception rate is 10%.

Lowering this rate can reduce processing delays, labor costs, and payment errors. Some common factors that contribute to invoice exceptions mainly include data discrepancies (e.g., mismatched invoice details) and vendor errors (e.g., invoices submitted in incorrect formats).

Try to aim for an exception rate below 5% by standardizing invoice formats, improving vendor compliance, and using automation for real-time validation.

6. Percentage of early payment discounts captured

This metric measures how effectively your AP team takes advantage of early payment discounts, directly impacting cash flow and cost savings. A higher percentage means better cash management and stronger vendor relationships, while a lower percentage indicates missed opportunities for savings.

This metric is important to measure as capturing more early payment discounts that leads to lower procurement costs and better supplier terms. Several factors that influence this percentage are:

• Invoice approval speed: Faster approvals ensure payments are processed within the discount window.
• Cash flow planning: Maintaining sufficient liquidity allows businesses to take advantage of discounts without disrupting working capital.
• Automation and reminders: AP automation tools can flag discount opportunities and prioritize them for timely payment.
• Vendor negotiation: Stronger vendor relationships can lead to more frequent or better early payment terms.

To calculate it, use:

For example, if your company had 100 early payment discount opportunities in a month and captured 80, your discount capture rate is 80%.

7. Percentage of late payments and penalties incurred

Tracking this metric helps you understand the financial impact of late payments. A high percentage signals inefficiencies in AP workflows, cash flow issues, or approval bottlenecks, all of which can hurt financial stability.

To calculate this:

For example, if your company processes 1,000 payments in a month and 50 are late, your late payment rate is 5%.

A high percentage of late payments often stems from approval delays, cash flow mismanagement, or a lack of structured payment scheduling. Without clear invoice processing workflows, payments can get stuck in approval loops, pushing them past due dates.

8. Number of supplier inquiries and disputes

This metric tracks the volume of payment-related inquiries and disputes from suppliers, providing insight into the efficiency and accuracy of your AP process. A high number of inquiries suggests recurring issues with invoice accuracy, payment delays, or poor communication, which can damage vendor relationships and slow down operations.

To calculate the number of inquiries and disputes:

For example, if your company processes 1,000 payments per month and receives 50 supplier inquiries, the inquiry rate is 5%, signaling potential inefficiencies.

Frequent supplier inquiries often stem from unclear payment timelines, invoice mismatches, or missing remittance details. If vendors don’t receive payments when expected or notice discrepancies in amounts, they’ll reach out for clarification, adding extra work for your AP team.

Minimizing supplier inquiries requires a combination of automation, clear communication, and standardized processes. Automated invoice matching and real-time payment status updates can significantly reduce disputes by ensuring accuracy before payments are sent.

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9. Supplier's payment terms

Tracking the average payment terms you have with suppliers helps manage cash flow and optimize working capital. Longer payment terms allow more flexibility, while shorter terms require faster outflows, impacting liquidity. Businesses that actively monitor and negotiate payment terms can improve financial stability and strengthen vendor relationships.

To calculate supplier payment terms:

For example, if your company works with five suppliers offering terms of 30, 45, 30, 60, and 45 days, your average payment term is 42 days.

Some factors that influence supplier payment terms are:

• Industry norms: Certain industries standardize payment terms at 30, 45, or 60 days, influencing what suppliers offer.
• Supplier leverage: Larger or high-demand suppliers often dictate shorter terms, while smaller vendors may offer flexibility.
• Company creditworthiness: Suppliers may extend longer terms to businesses with strong credit and a history of on-time payments.
• Negotiation strategy: Companies that proactively renegotiate payment terms can extend days payable outstanding (DPO) without harming supplier relationships.
• Automation and payment reliability: Businesses with automated, predictable payment processes may secure better terms as suppliers gain confidence in timely payments.

Optimizing supplier payment terms ensures cash flow is managed strategically, balancing liquidity needs with supplier expectations. Companies that successfully extend payment terms while maintaining strong supplier relationships can improve working capital without increasing financial risk.

10. Return on investment (ROI) of AP automation

Measuring the ROI of AP automation involves comparing the costs of implementing automation with the savings and efficiencies gained. A high ROI signals a successful implementation, reducing labor costs, improving accuracy, and accelerating invoice processing.

To calculate your AP ROI (in simplified form):

For example, if your company invests $50,000 in AP automation and saves $100,000 annually in reduced processing costs, your ROI is:

((100,000−50,000) / 50,000) × 100 = 100%

Several factors that influence the total savings potentially generated from incorporating AP automation include:

• Manual processing costs before automation: The higher the initial labor costs, the greater the potential savings from automation.
• Invoice volume: Businesses processing large invoice volumes gain higher savings due to reduced per-invoice processing costs.
• Exception rates: Automation significantly lowers costs in AP teams dealing with frequent invoice errors and disputes.
• Reduction in late fees and penalties: Automated scheduling ensures on-time payments, eliminating unnecessary fees.
• Scalability without additional staffing: Automation allows AP teams to process more invoices without increasing headcount, amplifying cost efficiency.

A well-optimized AP automation system can demonstrate its long-term value in reducing costs, improving financial accuracy, and enhancing operational efficiency.

How to track and improve accounts payable performance

To make meaningful improvements in AP performance, you first need to understand where you stand. Setting clear benchmarks and identifying inefficiencies are essential steps toward optimizing processes and reducing costs.

1. Establish AP performance benchmarks

Define benchmarks to measure AP efficiency and pinpoint areas for improvement. Key benchmarks to focus on include average invoice processing time, cost per invoice, and the percentage of invoices processed that we mentioned earlier. Industry standards and historical data can help you set realistic targets.

Ensuring your team is well-trained in AP best practices will also improve accuracy and consistency in meeting these benchmarks.

2. Identify areas for improvement

Once benchmarks are in place, analyze your current AP workflows to uncover inefficiencies. Common red flags include delays in invoice approvals, high exception rates, and frequent supplier disputes. Addressing these problem areas helps streamline processes and improve overall AP performance.

3. Implementing process optimizations

Optimizing AP processes improves efficiency, reduces costs, and enhances financial accuracy. By streamlining workflows and using automation, businesses can:

• Streamline invoice receipt and data entry: Electronic invoicing reduces manual entry errors and ensures all invoices are captured in a centralized invoicing system. This speeds up processing and minimizes the risk of misplaced invoices.
• Automate invoice matching and coding: Automated matching of invoices to purchase orders and receipts eliminates manual verification delays. Predefined coding rules ensure accuracy and free up AP staff for strategic tasks.
• Enable mobile approvals: Allowing decision-makers to approve invoices from anywhere prevents bottlenecks and ensures timely payments, reducing the risk of late fees and missed discounts.
• Use early payment discounts: Prioritizing invoices with supplier discounts lowers costs and strengthens vendor relationships. A well-configured AP system can flag and process these opportunities automatically.

4. Track progress with AP dashboards and analytics

Dashboards and analytics provide real-time visibility into AP performance, making it easier to track progress against your benchmarks and forecast AP. By monitoring trends, bottlenecks, and processing times, you can make data-driven adjustments to improve efficiency.

Regular performance reviews keep your AP team focused on continuous improvement, and conducting an AP audit ensures accuracy and compliance.

Modernize your accounts payable with Ramp

Optimizing your AP process is about making smarter financial decisions, reducing inefficiencies, and unlocking cost savings. And that’s exactly why we’ve built Ramp.

Ramp automates time-consuming AP tasks, giving your team the tools to work faster, reduce errors, and capture savings effortlessly. Our accounts payable software is able to:

• Automate invoice processing: Ramp’s AI-driven OCR technology captures and codes detailed invoices and line items with precision, minimizing manual input and reducing errors.
• Simplify approval workflows: Design smart approval processes with layered routing rules that automate reviews and send alerts only for significant changes, ensuring efficient oversight.
• Centralize payment management: Manage all vendor payments—whether domestic or international—across methods like check, card, ACH, or wire, all within a single platform with enhanced transparency.
• Streamline repetitive workflows: Automate recurring bills, batch payments, and vendor onboarding, with bulk editing ensuring quick updates and minimal manual input.
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Join over 25,000 businesses that trust Ramp to modernize their finance operations. Learn how our innovative solutions can transform your accounts payable processes and drive your business forward.

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