10 Essential metrics you need to know when automating your Accounts Payable with AI

In today's fast-paced, yet challenging Hospitality environment, organisations need to continuously find ways to streamline and optimise their performance. Brexit, the Covid effect and inflation have all hampered growth, impacting staffing, recruitment and business continuity. Amidst these challenges businesses strive on. As we observe a continued push of automation investments across the front of house arena, with POS, tap and pay, self-serve kiosks, marketing, reservations, workforce management and loyalty systems, we dive deeper into the back office to unearth a space that is often overlooked for innovation. Accounts Payable (AP), a key function in finance, has a huge impact on overall performance, improving cash flow, enhancing liquidity and protecting well-earned revenues. The rise of AI has already started to impact staff scheduling, inventory and demand planning but automation can go further into finance and the supply chain, not only in assisting teams with going paperless and digitising their invoice processing, but with faster data realisation that delivers instant access to actions and insights. Every facet can be accelerated, from invoice to pay, enabling faster reporting and a more timely close.

So what metrics can you actually track when automating AP? There isn’t a shortage that’s for sure but with every investment there needs to be ROI and time to value.

Here’s our view of ten metrics we believe to be significant markers in the space:

1. Accuracy: The accuracy of an AI model is paramount. This is the base measure we use to ensure improved efficiency. Enabling teams to manage by exception as well as empowering with straight-through processing compounds the opportunities to maximise productivity.
2. Processing Time: Time is everything in AP processing and so it is important to understand and report just how quickly invoices and bills can be processed, approved, right through to pay. The fewer the points of touch in the business the higher the efficiency, which equals better savings of time and money.
3. Straight-Through Processing (STP) Rate: STP rate measures the percentage of invoices that can be processed automatically without any human interaction. A higher STP rate reflects better automation capabilities with fewer costly points of touch.
4. Cost Reduction: Transforming AP with AI should result in cost savings when compared to traditional manual processing. Savings can be uncovered and realised from reducing labour costs, manual paper handling, admin errors, duplicates, fraud, late payment penalties and post close adjustments. Gartner, a global research organisation, reports that in the UK a single invoice costs between £4 and £25 when processing manually (which can even reach £50 in some instances) and with increasing costs Year on Year these hidden costs are not to be ignored.
5. Improved Compliance: Anomalies and fraudulent activities are increasingly threatening the hospitality sector, which is particularly susceptible. Scammers are leveraging advanced tactics to establish counterfeit businesses, websites, invoices and other deceptive practices leaving businesses exposed to the risks. A recent article in The Caterer - details how Chef Heston Blumenthal has called for greater urgency to protect restaurants from fraud is a great example of what is happening every day. Implementing AI facilitates the tracking, measurement and detection of irregularities, promptly identifying potential fraudulent events. Understanding how many events occur portrays to the overall risk the business faces.
6. Error Resolution Time: Tracking time to resolve errors and exceptions identified during processing measures overall effectiveness. The faster the error resolution the better the AP workflow. Track bottlenecks through to key individuals and measure the impact of potential change.
7. Visibility and Reporting: Reporting detail and process visualisation are key measures of capability. Understanding status, approvals and liabilities are all key performance indicators. Optimise your reporting capability with prompt enabled reporting tools and you enable access to your data with huge future potential.
8. Scalability: When your business grows, your cost base follows, not to mention the physical volumes in AP processing. AI enables scalability from day one with exponential capacity, all without the need for additional costly overhead.
9. Early Payment Discounts: Understanding and collaborating with your suppliers is important, and so realising early payment discounts when on offer can equate to significant cost savings. Automating the identification and action in order to save becomes ever more indispensable.
10. Improved Supplier Relationships: Engagement with suppliers is our last crucial element, after all, they keep your business going. Being easy to do business with is key, however having convenient access for suppliers to submit invoices across a wide variety of transfer methods is also key. If your invoice to pay process shows success with the ability to resolve disputes with a few simple clicks then your relationships can only ever improve.

The takeaway from our Top 10 is that by monitoring these metrics, organisations can truly evaluate the performance of their process and their actions. With the right standards in place, businesses can reap the rewards that AI can deliver, allowing businesses to transform their accounts payable function, freeing up cash in order to re-invest into revenue and growth.