Finance KPI list – Accounts Payable

Creditor days Creditor days is the average time that a company takes to pay its creditors.
Formula: (trade creditors) divided by (annual purchases) times 365
Unit type: Time

Direction: Range


Cycle time to resolve an invoice error Average cycle time (e.g. in days) to resolve invoice errors.
Unit type: Time

Direction: Minimize


% of electronic invoices Percentage of electronic invoices.
Interpretation: Electronic invoices are usually more efficient than invoices by mail.
Unit type: Percentage

Direction: Maximize


% of low value invoices Percentage of low value invoices (under e.g. eur/$/£ x)
Unit type: Percentage


% of invoices under query Percentage of invoices under query.
Unit type: Percentage

Direction: Minimize


Number of invoices outstanding Number of invoices outstanding in measurement period.
Unit type: Number


Percentage of invoices disputed.
Formula: [Invoices disputed] percentage of [total invoices]
Unit type: Percentage

Direction: Minimize


Discounts Lost Cost of passing up discount by paying invoice after discount period.
Unit type: Money

Direction: Minimize


% of invoices requiring special payment Percentage of invoices requiring special payment.
Unit type: Percentage


% of payable invoices without purchase order Percentage of payable invoices that have not been matched to a purchase order.
Formula: [Payable invoices without purchase order] percentage of [total payable invoices]
Unit type: Percentage

Direction: Minimize


% effectiveness in payables management This KPI should be applied together with the Days Payable KPI. The concept is to AGREE an extended due date on credit accounts, for the accounts department to ensure strict compliance with the due date.
Applies to: Purchasing Department and A/P Department
Formula: Days Payable on credit accounts / Average due days of credit accounts
Unit type: Percentage

Direction: Maximize


Accounts Payable Turnover This ratio shows how many times in one accounting period the company turns over (repays) its accounts payable to creditors.
Interpretation: A higher number indicates either that the business has decided to hold on to its money longer or that it is having greater difficulty paying creditors.
Days Payable
This ratio shows how many days it takes to pay accounts payable.
Unit type: Time

Direction: Range


Invoicing processing costs Costs of processing invoices.
Unit type: Money

Direction: Minimize


Average monetary value of invoices outstanding Average monetary value of invoices outstanding.
Formula: average of [value of outstanding invoices]
Unit type: Money


Monetary value of invoices outstanding Total sum of monetary value of outstanding invoices.
Formula: sum of [value of outstanding invoices]
Unit type: Money


Average monetary value of overdue invoices Average monetary value of overdue invoices.
Formula: average(value of overdue invoices)
Unit type: Money


Monetary value of overdue invoices Total monetary value of overdue invoices.
Formula: sum of [value of overdue invoices]
Unit type: Money Direction: Minimize


Accounts Payable Money owed (payable) to suppliers for goods or services purchased on credit that must be paid within a year.
Number of overdue invoices Number of overdue invoices i.e. invoices that have not been paid before their payment date.
Unit type: Number Direction: Minimize