Cash Application Performance Metrics 101: How to Measure Cash Application Automation

There are plenty of questions regarding the measurement of cash application automation. Many are confused because each vendor uses their own automation cash application performance metrics to paint their products in a good light. Unfortunately, many of these metrics fail to provide a clear picture of the automation’s effectiveness.

One metric that commonly and constantly comes up is the percentage of invoices the ERP or the accounting system successfully closed using the cash application solution, or what is more known as the kill rate. This metric, however, fails to measure the automation as it instead evaluates accuracy. This means that the kill rate only offers a partial picture since it puts together both the manual and automated parts that analysts do to correct exceptions and deal with non-automated payments.

Anyone searching for insights regarding how much more efficient or how much the firm is saving because of automation is better off looking at other metrics rather than rely on the kill rate or the ones provided by vendors.

Measuring Real Automation Requires Measuring the Work Done by the System on Its Own

Measuring actual automation requires looking at how the system completed much work without the interference of the analysts. This measure is a fraction of all the accurate payments and invoices processed and applied without being touched by the analysts— no double-checking, no exceptions. The metric will provide companies with insight into how much work was done by the system and the savings of automation.

Measuring Overall Throughput to Determine How the System is Eliminating Operational Inefficiency

Those in search of a way to measure how the team is performing overall with the use of an automation system must consider metrics like overall payments or checks processed per individual member daily or throughput. These two offer an accurate picture of the company’s gains in terms of eliminating operational inefficiencies.

Measuring Automation Effectiveness According to Each Type of Payments and Remittances

The first two metrics above offer an evaluation of automation and efficiency. But those seeking to find opportunities for improvement will need to dig a bit further by monitoring throughput by remittance or payment type and automation percentage. Measuring these will let companies gain insights if the team and the system work better with a certain remittance type. It will also help identify opportunities for additional automation or improvement. Vendors tend to provide complex and impressive-looking metrics to sell their products. But in truth, measuring the performance of automation is much simpler. Automation brings many benefits but as with most technological advancements, companies still must measure their effectiveness so they can continue improving their workflows and processes. When measuring the effectiveness and gains of automation, companies must first measure the number of invoices and payments the system processed without analyst’s intervention and enhance the metrics by measuring the team’s overall throughput. Drilling down into specifics, namely, remittance formats and payment types will help identify the pain points and improve them.

More Resources

Asset 5

Datasheets

View and download Cforia product and solutions data sheets.

Asset 6

Whitepapers

View Cforia thought leadership and best practices content.

Asset 7

Webinars

Watch on-demand webinars that cover a variety of O2C topics.