Benchmarking and Best
Practices – Buyer Beware

When you’re asked to come up with statistics to benchmark your A/P operation against others, do chills run down your spine? Are your costs more than ten dollars per transaction and are you being asked why others can process an invoice for less than $2? Are the best practices you’ve been asked to put in place not applicable to your organization or, even worse, potentially harmful?

While benchmarking can give you ideas as to where to look, you should view the differences between your organization and others with a lot of questions. Your focus should be on figuring out what’s included and what’s excluded, what’s similar and what’s different.

One organization may treat each airbill that it receives and processes electronically as a transaction. You may treat one week’s or even one month’s airbills as a single transaction. Some A/P operations don’t pay for space, computer time, check stock, postage, bank charges or off-site storage. Some get charged with allocated overhead costs that exceed direct costs. Those are just for starters. The functions performed within your A/P may differ greatly from those in other organizations. Who mails the checks? Who handles calls from vendors? Who handles fixed assets? Who reconciles the bank account?

One company’s best practices are not necessarily the best practices for you. You may have many international travelers while another has none. Their process for handling employee expense reimbursements may be inappropriate for you. Your accounts payable system may not check for duplicate payments across paying entities. If so, you’ll need procedures and controls that others may not need. If you have many decentralized locations and a corporate-wide network in place, you’ll be able to do things that others can only dream about. If your volumes are very high, imaging may be cost justified but that may not be the case unless you can piggyback on a system justified by another department. However, if you can get most of your invoices electronically, you may not need imaging for the rest.

These are just a few of hundreds of examples of misapplying and misunderstanding of A/P benchmarking and best practices that we’ve encountered. If you’d like to add to our collection, please e-mail your examples to beware@recapinc.com.

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