Total cost to perform the process group "process accounts payable and expense reimbursements" per $1,000 revenue

This measure calculates the total cost per $1,000 revenue 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. The total cost is the sum of outsourced, overhead, personnel, system, and other costs. 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:
103971
Total Sample Size:
1,551 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are dollars.

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(Total cost to perform the process "process accounts payable (AP)" + Total cost to perform the process "process expense reimbursements") / (Total business entity revenue * 0.001)

Key Terms

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Process Cost Components

Total cost for a process, process group, or function consists of the following five components.

Internal/In-house operating cost consists of the first four components (personnel, systems, overhead, and other).

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.

Systems Cost

Systems costs include all expenses, paid or incurred, in conjunction with:
Computer hardware or computer software acquired by the organization or provided to the organization through service contracts.

Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees should not be included in depreciation of new system implementations. Include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should be captured in the separate cost category labeled outsourced cost.

Systems cost should include all salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support.

Overhead Costs

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Other Cost

Other costs are costs associated with the specified process, but not specifically covered in personnel cost, systems cost, overhead cost and outsourced cost in this questionnaire. These other costs include costs for supplies and office equipment, travel, training and seminars. Include the cost of telephones, except for that portion captured in systems cost.

External/Outsourced Cost

In determining outsourced cost, include the total cost of outsourcing all aspects of the specified process to a third-party supplier. Exclude one-time charges for any type of restructuring or reorganization. Outsourced costs should also include costs for intracompany outsourcing (i.e., reliance on a shared services center or other business entity).

Total Annual Revenue/Net Revenue

Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support. For government/non-profit organizations, please use your non-pass-through budget. For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income. Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.

Process Accounts Payable

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.

Process Expense Reimbursements

Processing of advancements and reimbursements for employee expenses on the organization's behalf. This process often dovetails with the processing of accounts payable. This process also includes development and use of policies and procedures.

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 (7.2.1)

  • 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.