Struggling with manual processes, late payments, and chasing invoices? For many finance teams, accounts payable is where bottlenecks build up – fast. This article from ApprovalMax walks you through tracking the right KPIs.
Accounts payable KPIs are metrics used to measure how efficient, accurate and cost-effective your AP processes are. This article is for accountants, bookkeepers, AP managers and CFOs who want better insight and control over AP. We’ll walk through:
Which KPIs to track
How to improve performance
How automation helps you reach your goals faster
KPIs (key performance indicators) are measurable values to track how your AP processes are performing.
In accounts payable, KPIs help you answer important questions like
How long does it take to process an invoice?
How accurate are your payments?
Are you missing early payment discounts?
Leading and lagging are the two types of accounts payable KPIs.
Leading KPIs help predict future performance. For example:
Cycle time
Invoice exception rate
Lagging KPIs show past outcomes. For example:
Days payable outstanding (DPO)
Late payment rate
You can also group KPIs into the following categories:
Efficiency KPIs (e.g. invoices processed per employee)
Accuracy KPIs (e.g. payment error rate)
Timeliness KPIs (e.g. on-time payment rate)
Cost KPIs (e.g. cost per invoice)
Companies that don’t measure performance data are simply guessing, which can end up costing you in the long-term.
Tracking KPIs helps to:
Improve cash flow (e.g. optimising DPO keeps more cash in the business)
Strengthen vendor relationships (Late payments can damage trust)
Stay audit-ready (Clean data and audit trails make it easier to meet compliance requirements)
Make smarter decisions (KPIs give CFOs and finance leads the latest data, so they can spot issues early on and make informed decisions)
This isn’t just for large businesses. Smaller teams can benefit too, saving hours every week and freeing up working capital.
But how do you get started? Think of your biggest pain points and choose three KPIs below that relate.
Here are 10 essential KPIs to track, including what they measure and how to calculate them:
Days payable outstanding (DPO)
What it measures: Average number of days to pay suppliers
Why it matters: A higher DPO can improve cash flow, but waiting too long can hurt supplier relationships
Formula: (Accounts payable / Cost of goods sold) x Number of days
Cost per invoice
What it measures: Total cost to process a single invoice
Why it matters: High costs often point to manual processes and inefficiencies
Formula: Total AP cost / Number of invoices processed
Early discount capture rate
What it measures: How often early payment discounts are used
Why it matters: Missed discounts = missed savings
Formula: Discounts captured / Discounts offered × 100
Payment error rate
What it measures: Percentage of payments with errors
Why it matters: Errors increase risk and waste time
Formula: Number of payment errors / Total payments × 100
Late payment rate
What it measures: Percentage of payments made after due date
Why it matters: Late payments can lead to penalties and damage trust
Formula: Late payments / Total payments × 100
Average time to approval
What it measures: How long it takes to approve an invoice
Why it matters: Long delays often mean unclear workflows or bottlenecks
Formula: Total time from invoice receipt to final approval / number of invoices
Invoices processed per employee
What it measures: Invoices handled by each AP team member
Why it matters: Helps track productivity and staffing needs
Formula: Total invoices processed / Number of AP employees
Time to process a single invoice
What it measures: Time from receiving invoice to payment
Why it matters: Long cycle times slow down the payables process
Formula: Time of payment - Time of receipt
Invoice cycle time
What it measures: Average time through the full AP process
Why it matters: Key efficiency metric that highlights delays
Formula: Total invoice processing time / Number of invoices
ROI on AP automation
What it measures: Return on automating AP tasks
Why it matters: Shows the financial value of automation tools
Formula: (Benefits - Cost of automation) / Cost of automation × 100
In this section, we’ll look at practical ways to boost your KPIs, both across the board and for individual roles.
Standardise invoice formats
Use consistent templates and data fields for all incoming invoices. This reduces errors, speeds up processing and limits the need for manual corrections.
Set clear approval thresholds
Define who needs to approve invoices based on value or type. This prevents unnecessary delays and helps invoices move through the system faster.
Create a monthly KPI review habit
Block time each month to review key metrics with your team. Use this time to flag bottlenecks, discuss trends, and adjust processes as needed.
Clean and consolidate vendor data
Keep your vendor database accurate and up to date. This helps avoid duplicate payments, mismatches, and delays during approval.
Train staff on recurring AP issues
Identify common process errors like missing purchase orders or incomplete entries, then run short training sessions to prevent repeat mistakes.
Every role in a finance team can impact accounts payable KPIs. Here’s a breakdown of how different team members contribute:
CFOs
Focus KPIs: DPO, automation ROI, discount capture
Set company-wide goals that align with business priorities
Use dashboards to monitor trends and progress
Invest in automation and standard processes
AP Managers
Focus KPIs: Invoice cycle time, exception rate, cost per invoice
Monitor workflow delays and adjust approval routing
Use reports to identify training or resource gaps
Benchmark monthly and adapt team workloads
Bookkeepers/Accountants
Focus KPIs: Late payment rate, error rate, on-time payment rate
Double-check invoice coding and data entry
Track due dates to stay ahead of deadlines
Work with vendors to solve data mismatches
Aligning KPIs to roles helps teams to take action rather than just reporting on results.
If you're tracking KPIs but still handling approvals manually, there's a faster and more efficient way forward. Automating the process helps you create real, measurable results. Here’s how:
Reduce manual data entry
Automated tools extract and validate invoice data, cutting down on errors and speeding up processing time. This frees your team from repetitive admin and improves data accuracy.
Set smart approval workflows
Automatically route invoices based on custom rules (amount, department, or vendor) so approvals land with the right person at the right time. This helps to keep things moving.
Track KPIs in real-time
Built-in dashboards give you a live view of your performance metrics. You can monitor trends like DPO, error rate, or cycle time without waiting for month-end reports.
Make smarter decisions
KPIs give CFOs and finance leads the latest data, so they can spot issues early on and make informed decisions
Minimise exceptions with cleaner data
Automation helps enforce good data practices, from vendor onboarding to PO matching. Fewer exceptions means less manual intervention and faster invoice processing.
Capture more early payment discounts
Alerts and better visibility into due dates make it easier to act quickly and take advantage of early payment terms, improving your discount capture rate.
Centralise audit logs
Every action, from invoice creation to approval and payment, is automatically logged and stored. This makes audit prep faster and more reliable.
With the right tools in place, automation helps you not only meet your KPI goals, but consistently exceed them.
ApprovalMax gives you the tools to track, build on and act on your accounts payable KPIs. From automated approval workflows to real-time reporting and audit trails, it’s built to support strong financial controls. Whether you want to reduce errors, save time, or improve cash flow, ApprovalMax can help make it happen.
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