Analyze Accounts Payable Data
Published: | Time to read: 4 minutes

Get the most out of your Accounts Payable Data

Matt Wald
Author:Matt Wald

Accounts payable data is a powerful tool in creating a data driven organization, if you can properly harness it.

The best and most obvious reason to automate your accounts payable by implementing invoice management software is because it will save your organization time and money. And it will also drive accounting best practices and all but eliminate any chance of invoice fraud.

But AP automation will also enable your organization to become data driven around purchasing. And, as we all know, data driven organizations are able to make smart choices to create efficiency and save money.

Because AP manages critical financial data, it can provide insight into payment trends and preferences. And it can be a resource for finding cost savings in your organization.

AP automation allows your organization to collect, analyze, and use AP data to benefit your organization. So, if your digital transformation does not include AP automation you are missing out on a massive amount of actionable accounts payable data.

Let’s examine how to analyze AP data to save money.

Collecting and Storing Accounts Payable Data

Using AP data to save money starts with collecting that raw data.

If your organization manually processes paper invoices you have no access to that raw data unless you tediously extract data from paper invoices.

And no raw data means you are left to guess about what’s going on in terms of the details and trends in invoices and spend.

But AP automation provides a searchable document and data storage and archive.

The raw data from your invoices is automatically collected and stored. So it is available for you to analyze in every way you can imagine.

Images of invoices are stored electronically, providing you with easy access for analysis, audits, or fraud investigation. No more searching through endless filing cabinets for pieces of paper!

Instead, you have instant access to your multi-dimensional invoice data electronic filing cabinet!

AP automation provides instant access to your AP data. So let’s take a look at some of the most important ways you can analyze that data for cost savings.

Use our savings calculator to see how much you could save

Accounts Payable Spend Data Analysis

Accountancy data icon

One of the most popular and important uses of accounts payable data is spend analysis.

You can use AP data to analyze what you spent with, for example, your top 5 vendors. This can reveal opportunities to negotiate with your largest vendors on price, terms, or volume discounts.

Spend data analysis can also identify areas where your organization is paying too much.

Let’s consider an obvious example. If one company branch is paying more for a product or service than another branch in the same geographic location, spend analysis will identify that. Then you can replace the more expensive service or product with the cheaper one.

Further, when you know exactly what you are spending across the company on specific goods or services, you have the opportunity to bundle those goods or services and negotiate a volume discount.

These are just a few ways pend analysis allows you to use AP data to save money.

The bottom line is that if you can measure spend you can manage it.

Payment Data Analysis

Another common accounts payable data analysis that can improve your bottom line is payment data analysis.

AP data analysis will reveal how quickly your organization turns invoices around. And if you can measure time from invoice to payment, you can manage it.

Ensuring prompt payments can eliminate and reduce late payment penalties while promoting strong supplier relationships.

Even better, quick invoice payment can qualify for early pay discounts.

Best of all, AP automation will not just help measure and manage your AP data. It will allow you to process invoices up to 500 times faster – making it simple to qualify for early pay discounts. Here’s how!

Category AP Data Analysis

Categorizing you accounts payable data empowers you to look at spend in all new ways, including matrix analysis.

For example, you can analyze the number of high-mid-low value upcoming invoices by price range category. This insight allows you to prioritize and plan around upcoming spend.

Taking that actionable data one step further, use it to seek higher and healthier valuation by analyzing trends developed for set of period by particular due date category.

With this level of sophisticated analysis there are no limits to how you can think strategically about spend.

Get a free consultation with an AP automation expert

AP Department Efficiency Analysis and Improvement

Accounts payable department efficiency icon

AP automation allows you to track the number of invoices processed over a determined period of time – in real time. This allows department leaders to mange their teams using specific data to assess resources.

Each AP resource can be assessed based on productivity and efficiency. Since automation will be making the team more efficient, resources can be re-allocated to more productive work. i.e. finding cheaper vendors and negotiating early pay discounts.

You will also be able to identify productivity bottlenecks through automated process reporting. This empowers managers to adjust workloads and predict busier and slower AP processing times throughout the year.

Perhaps most importantly, being a data-driven AP department allows you to determine the cost per invoice and invoice cycle times for AP processing. And that’s a KPI that every data driven organization will manage to.

Cash Flow Analysis and Forecasting

Cash is king.

With access to your organization’s AP data you can do detailed and highly accurate forecasted cash outflow. Especially on current and overdue AP.

You can also use it to review past spend to identify trends that will help you forecast spend.

Be it seasonal, quarterly, or based on some other factor, accounts payable data will show you when you tend to spend.

You can use your AP data to compare inflow of funds in AR to provide extremely accurate cash forecasting.

If you can measure your cash forecast, then you are empowered to manage it.

Improving cash position in relation to current liabilities will improve the organization’s balance sheet liquidity.

That’s the power of accounts payable data.

Bottom Line: How to Analyze Accounts Payable Data to Save Money

The most obvious reason to automation your accounts payable department is to save time and money.

But another terrific reason is to empower your team to collect, analyze, and act on AP data.

The sooner you start collecting this data, the sooner you can act on it to save money and improve cashflow.

So why not book a free demo today, and let us show you how simple and affordable AP automation can be!