KPIs in Accounts Payable for Health and How to Improve Them

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Healthcare accounting is often complex.

Healthcare accounting is often managed by health support organizations or management offices that handle tons of vendors across geographies. This can create pretty complex back-office processes especially when it comes to invoice processing requirements.

These types of organizations often require a multitude of users, location specific coding and multi-step approval routing for invoices. It's also common for them to need the ability to pay out of multiple bank accounts from central accounting.

With compliance creating a constant set of hurdles for health businesses, errors and lack of traceability in accounts payable are red flags. But with complex structures and rapid growth, verifying the accuracy of these invoices and reconciling them with internal records can become nearly impossible without automation.

5 KPIs in Accounts Payable

Here are a few key performance indicators to help you give your accounts payable process a health check. If you are looking into implementing a new accounts payable processing solution, these KPIs are also good to keep in mind to better understand your needs so you can get the most value of a new accounting tool.

1. Average Time Per Invoice

Track your invoice journey to accurately gauge the average time of your end-to-end AP process, as well as the time spent for each step on that journey. This will help you create a strategy to shorten your time per invoice and it will also help calculate the next KPI for AP--your cost per invoice.

2. Cost Per Invoice

This is often considered the most important KPI in accounts payable. Learn more about calculating how much it costs you to process an invoice. “Companies that use little or no automation tend to spend more than $10 per invoice, while companies that have little to no manual steps in their AP process spend $2 or less per invoice, according to data from the American Productivity & Quality Center. That means if you have not automated your payments process, you could potentially reduce your AP overhead by 80%. This is why the cost to process an invoice is such a key metric.”

3. Number of Invoices Processed by Each Employee

This will also help you determine your cost per invoice. This step is not just about seeing who can process an invoice the fastest, but to identify bottlenecks in your process to make your team's job easier.

4. Exceptions per Month

Exceptions can hobble your entire AP process and even impact an already stressful period closing. What percentage of total invoices are flagged for exceptions? What are the most common types of exceptions? Understanding these issues and finding effective solutions for these problems is key to reducing AP Overhead.

5. Number of Steps in Your AP Process

The previous four KPIs for AP departments should be included in ongoing tracking, but what if you are considering a software implementation or other project that requires AP change management? Determining the number of steps required to process, approve and pay an invoice is a critical metric for identifying and reducing redundancies. It is also smart to reevaluate this on an annual or biannual basis.

How to Improve Key KPIs in Accounts Payable

key kpis in accounts payable metric ap performanceIf your AP department is not performing as well as you know it can, it can be frustrating and costly. Luckily there are a few steps you can take to improve your accounts payable process.

The simplest, quickest and often the most cost-effective way to improve your AP process is automation software. AP Automation software will not only save money and help you improve these performance indicators, but it will help track them with more accurate data insights. But it isn't the only step. Read this post to find out more about How Your Accounts Payable Process Can be Improved.


Measuring your accounts payable performance is the first step to making AP processing easier, cleaner, and less time consuming, so you can reduce your stress and frustration.

While there are other KPIs to consider, improving just a couple of these will greatly improve your process.

We Care About Healthcare Accounting

Working in health and health-related businesses, accounts payable is rarely a top priority for non-financial employees. But those of us who work in the world of AP every day know accounts payable pros are gatekeepers between the business and its vendors.

AP is critical to the financial health of the business because managing vendor relationships, negotiating discounts, and ensuring timely payments often falls on the shoulders of accounts payable.

As providers of AP automation, most of our health industry users come to us during a time of rapid growth at their business. As the business grows the number of invoices they need to process grows. Their AP process is becoming really cumbersome and monthly closings are a regular struggle.

If this sounds familiar to you, don't wait until you reach the breaking point with your accounts payable processes. Consider getting started with better accounts payable software today by checking out our healthcare accounts payable page.

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