Personnel cost to perform the process group "process accounts payable and expense reimbursements" per process group FTE

This measure calculates personnel cost per process group full-time equivalent (FTE) employee to perform the "process accounts payable and expense reimbursements" process group, which consists of processing payments of operating expenses and other supplier charges and processing of advancements and reimbursements for employee expenses on the organization's behalf. Personnel cost refers to employee salaries/wages, bonuses, benefits, etc. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the "process accounts payable and expense reimbursements" process.

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure ID:
104829
Total Sample Size:
1,131 All Companies
Performers:
25th
- Median
- 75th
-
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are dollars.

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(Personnel cost to perform the process "process accounts payable" + Personnel cost to perform the process "process expense reimbursements") / (Number of FTEs who perform the process "process accounts payable (AP)" + Number of FTEs who perform the process "process expense reimbursements")

Key Terms

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FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

Personnel Cost

Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.

Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.

Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Median

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (7.3.0)

  • 9.6.1 - Process accounts payable (AP) (10756) - Processing payments of operating expenses and other supplier charges. This includes the development of policies and procedures around processing of accounts payable and all operations. This process is often supported by key technology enablers.
    • 9.6.1.1 - Verify AP pay file with purchase order vendor master file (10869) - Matching records of bills to be paid with accounts. Check accounts payable entries with vendor's account for every payment made.
    • 9.6.1.2 - Maintain/Manage electronic commerce (10870) - Tracking all online transactions.
    • 9.6.1.3 - Audit invoices and key data in AP system (10871) - Monitoring and evaluating bills registered in accounts books. Check all invoices. Maintain records.
    • 9.6.1.4 - Approve payments (10872) - Processing payments for products/services.
    • 9.6.1.5 - Process financial accruals and reversals (10873) - Handling transactions for accruals and reversals. Record transactions in the books of accounts on an accrual basis (irrespective of the actual cash flow) and reversals basis (cancel out the adjusting entries) for balancing accounts.
    • 9.6.1.6 - Process payables taxes (10874) - Filing the amount of taxes that a company owes as of the balance sheet date. Prepare tax returns, including the income tax filing for an individual or business entity from earnings.
    • 9.6.1.7 - Research/Resolve payable exceptions (10875) - Resolving any atypical or inconsistent situation concerning payments to be made by the organization. Address any exceptional case of accounts payable on an ad hoc basis, by seeking counsel or carrying out any necessary research.
    • 9.6.1.8 - Process payments (10876) - Making payments for products/services on due dates (payment cycle) decided by parties involved.
    • 9.6.1.9 - Respond to AP inquiries (10877) - Clarifying or address queries relating to the particulars of AP such as date, discounts, amount, and installments. Coordinate with concerned parties about the fulfillment of bills payable.
    • 9.6.1.10 - Retain records (10878) - Keeping bills of every transaction for future reference.
    • 9.6.1.11 - Adjust accounting records (10879) - Rectifying for alterations occurred in accounts while recording.
  • 9.6.2 - Process expense reimbursements (10757) - Processing reimbursements to employees for the expenses incurred during the course of business. Approve and process advancements and reimbursements for employee expenses on the organization's behalf. Capture and report relevant tax data and manage personal accounts.
    • 9.6.2.1 - Establish and communicate expense reimbursement policies and approval limits (10880) - Explaining policies and procedures related to reimbursements requests by employees. Set policies regarding reimbursement process and amount limits etc. Inform employees.
    • 9.6.2.2 - Capture and report relevant tax data (10881) - Collecting and reporting all pertinent information regarding the taxes paid by the organization's employees.
    • 9.6.2.3 - Approve reimbursements and advances (10882) - Permitting expense reimbursement requests from employees.
    • 9.6.2.4 - Process reimbursements and advances (10883) - Paying for expense reimbursement requests from employees. (Follow Approve reimbursements and advances [10882] according to policies and conditions.)
    • 9.6.2.5 - Manage personnel accounts (10884) - Maintaining accounts of individuals who are connected with business.
  • 9.6.3 - Manage corporate credit cards (20929) - Handling and authoring credit cards to business entities or for corporate purchases.
    • 9.6.3.1 - Establish corporate credit card policies and approval limits (20930) - Developing procedures for using company credit cards. Set or approve credit limits.
    • 9.6.3.2 - Process corporate credit card requests (20931) - Handling applications credit card applications for business expenses.
    • 9.6.3.3 - Order corporate credit cards (20932) - Obtaining credit cards for business-related expenses.
    • 9.6.3.4 - Manage corporate credit card accounts (20933) - Handling credit card accounts of business customers.
    • 9.6.3.5 - Approve/Change credit limits (20934) - Authorizing changes to the available credit advances.
    • 9.6.3.6 - Cancel/Deactivate credit card (20935) - Blocking an existing credit card to disable all future transactions.