A new productivity tool promises to change the playing field for the accounts payable profession. The AP Productivity Index, announced in May, is the first tool of its kind to gauge the impact of AP metrics such as operations costs, staff productivity, turnaround time, and error rates.

Developed by International Accounts Payable Professionals (IAPP) in partnership with PRGX and APQC, the tool will help CFOs and AP leaders play a more informed role in advancing organizational objectives. This is especially critical at a time when the economy seems to be coming out of recession but finance departments face continued pressure to cap costs, pay greater attention to working capital, and become more proactive in improving the way they operate.

At most organizations, data about AP and the procure-to-pay cycle remains an untapped asset because of the complexity and time required to mine it and analyze it. The AP Productivity Index is designed to provide a set of benchmarks and measure performance against them at regular intervals. It compares how top-performing AP departments handle procedures, what they have in common, and how changes to their operations can affect the overall performance of their organizations.

IAPP, PRGX, and APQC are signing up organizations to participate in the project this summer, and results will be posted as available at www.TheIAPP.org/apindex. Among the key findings of the team’s first benchmarking study:

• About 62 percent of AP top performers use a shared services model. 

• There is no relationship between outsourcing and AP top performance – in fact, outsourcing is relatively rare. 

• AP top performers use less two-way and three-way matching. 

Researchers call the index a “30,000-foot view” into how an organization is performing, based on factors such as how long it takes to pay its bills. “It’s an alert,” says Neville Sokol who works with research services at APQC in Houston. 

“You want to have an early indicator something is wrong,” says Evert Hulleman, who works as an advisor with APQC, headquartered in Atlanta. “It’s like the Dow Jones.” 

To read more about the AP Productivity Index, click here.