This is likely a question CFOs and finance leaders ask themselves as they look for ways to improve overall business performance. Seeking answers to this question can be a challenge however! For instance what does productivity mean? What are key productivity related work activities and outcomes should you measure?

Fortunately, the PRGX Productivity Index (recently updated for 2012) is a great resource to help you answer these questions. This report  is issued bi-annually in partnership with the Institute of Financial Operations and APQC.

APQC is the leading source anywhere for best practices and performance benchmarks. With one of the world’s largest databases—based on more than 8,500 benchmarking and best-practice studies and growing—our members have access to data they can’t get anywhere else. We've spent years perfecting a rigorous research process and represent a track record of innovation in developing models, tools, and frameworks to help members improve.

What is Productivity?

Productivity is about two things: being effective and efficient. Efficient is how fast your staff can do something and effective is how good they are at doing it. It's about how AP functional tasks get  done fast, at the lowest cost while producing the desired result (report, payment, resolution etc.). 

What to Measure?

The PRGX Productivity Index is a benchmarking report that uses the following key performance indicators (KPIs) for Accounts Payable productivity. Companies are surveyed regularly in order to find out how productive they are and what they are doing in order to be more productive. Below is the chart from the report that shows you what KPIs are measured and how they are weighted.

Key Take-a-ways 

• • More organizations are actively seeking out and investing in ways to improve both the efficiency performance (operating cost and productivity) of as well as the effectiveness (service cycle times and payment accuracy) of their AP processes and organizations
  • Top Performers significantly outperform Median Performers in terms of efficiency with AP cost to process an invoice 46% lower, AP cost per $1,000 in revenue is 24% less, and AP productivity (invoices per AP FTE) 60% higher than Median Performers.
  • On the effectiveness side of the equation, the gap between Top Performers’ and Median Performance is not quite as drastic, with Top Performers holding an 8% advantage in the percent of invoice line items paid on time, an 11% edge in percentage of discounts available that are taken and a 33% advantage in cycle time in days to resolve an invoice error.
    Today, virtually every organization has invested in core accounts payable application

Yakidoo is helping organizations capture and digitize paper invoices as well as invoices received in other formats including those received via email or as PDFs, faxes and images. Automating this function alone can help companies eliminate costly inefficiencies that exist with manual keying and data entry.

What are Top Performers Doing?

• • Higher levels of invoice automation
  • High utilization of data capture, document scanning and optical character recognition (OCR) used to convert paper invoices into electronic data
  • High utilization of shared services operating model for accounts payable processing. The majority of Top Performers deploy shared services centers (either captive or outsourced) to receive and digitize paper invoices, manage invoice processing exceptions, and manage payment processing activities. Many Top Performers gain additional cost structure advantages by locating AP shared services operations in lower cost operating geographies

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About the Author

Alfredo De Vanna is CTO  of Yakidoo. He has over 10 years of international experience deploying over 80 critical information technology and enterprise content management systems. He is fluent in English and Spanish.