Accounts payable metrics within the retail industry
Keeping track of accounts payable metrics in real-time was essential for the retail industry to remain competitive and profitable during COVID-19. Companies with cloud automation could track business vital signs, including AP metrics to quickly meet changing business needs as they happened.
AP plays a crucial role in the bottom line, especially in the competitive retail industry. Streamlined automated workflows provide critical data to make timely determinations in a constantly changing retail environment. Discover how tracking accounts payable metrics helps retailers stay ahead of the curve.
Keeping Track of KPIs
Key performance indicators (KPIs) are crucial in both retail and the AP department. Creating retail KPIs enables management to define its business objectives, including locations, personnel, revenue, liabilities, and more, and plan the budget accordingly. In addition, effective strategizing depends on metrics that track the results of various campaigns to make financial and logistical changes as needed. With that in mind, customer behavior, brand health, and brand advocacy are three retail KPIs to track post-pandemic. Understand these numbers in real-time helps management determine current positioning and future strategies.
Automaton plays a critical role in helping management develop and track KPIs for optimum performance and profit. Real-time updates and collaboration support timely changes that impact overall profitability. Five important AP KPIs to track include cost per invoice, invoice lead time, number of invoices per accounts payable full-time employee, automatic distribution percent, and touchless processing for the highest efficiency level.
Metrics Matter
Metrics matter in retail, especially with the new normal that continues post-pandemic. As the retail industry evolves, metrics to track include:
- Average transaction value
- Inventory turnover
- Sales per square foot
- Gross margin return on investment
- Conversion rates
- Customer retention
- Traffic, both digital and foot
Financial metrics also matter to retailers as they evaluate the numbers before, during, and after COVID-19. Metrics to review include:
- Operating expenses
- Quick ratio
- Net profit margin
- Days of inventory outstanding
- Days of sales outstanding
- Days of payables outstanding
- Accounts payable turnover
- Cash conversion cycle
Accessing the metrics as they happen gives management the knowledge and resiliency to make essential changes when they matter most. Digital differentiation helps retailers meet and exceed customer expectations. With the ebb and flow of retail’s varying seasons, having accurate information at your fingertips can mean the difference between a business boom or bankruptcy.
Improve Efficiency and Accuracy
Automated workflows ensure the highest level of accuracy. Touchless processing eliminates the inevitable human errors associated with manual processing. Consider the cost of overpayments and how automation makes a difference. Errors once unnoticed are captured before they become losses. Plus, AP staff can focus on more strategic initiatives instead of toiling over manual tasks.
Plus, accuracy is vital in supplier relationships to keep production moving forward seamlessly. Retailers rely on strong supplier relationships to provide essential goods and services to consumers. Unfortunately, late payments and other errors damage supplier relationships and can interrupt the supply chain.
AP automation captures accounts payable metrics and KPIs, empowering the AP team to make relevant suggestions about cost-saving discounts and initiatives. As a result, rather than focusing on tedious manual tasks, the AP team emerges from the back office to provide insights that help reduce costs and increase profits in retail.
Reduce Fraud
Security is a top concern for retailers. Customers expect to have a secure shopping environment in-person and online. Anything less means retailers lose customers to the competition. Privacy and trust are crucial for retailers who need customers to depend on them for honesty and integrity throughout the shopping experience.
Automated workflows detect inaccuracies and issues to eliminate fraud. Plus, automation provides a secure environment for customer data in a digital world. Management has a constant finger on the financial pulse to instantly stop fraudulent transactions and activities that could compromise a retailer’s reputation - and business.
Investment in Stability
In the past two years, the essence of the retail industry dramatically changed. The way people lived, worked, and shopped was different - and now, so are their needs. Retailers rely on automation to provide KPIs in real-time to keep track of a rapidly changing retail climate. Plus, automation supports remote work during a pandemic and other disruptions, such as natural disasters.
Retail organizations with automation could track accounts payable metrics accurately to stay relevant in a changing business world. In addition, AP automation supports remote work and collaboration to keep everyone working, productive, and profitable regardless of external circumstances. As a result, automation is an investment in stability, enabling retailers to open their doors - whether virtually or in-person - regardless of outside events.
