# Value of purchases (in millions) per FTE that performs the process "process accounts payable (AP)"

This measure calculates the value of purchases (in millions) per full-time equivalent (FTE) employee that performs the "process accounts payable (AP)" process, which consists of processing payments of operating expenses and other supplier charges. It is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the "process accounts payable (AP)" process.

## Benchmark Data

Measure Category:
Cost Effectiveness
Measure Id:
104204
Total Sample Size:
1,934 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
No

## Compute this Measure

Units for this measure are dollars.

`Value of all materials and services purchased / (Number of FTEs who perform the process "process accounts payable (AP)" * 1000000)`

## Key Terms

#### FTEs - (Full Time Equivalent Employees)

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

#### 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.

#### 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

#### 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.

## Measure Scope

#### Cross Industry (7.3.0)

• 9.6.1.1 - Verify AP pay file with purchase order vendor master file (10869)
• 9.6.1.2 - Maintain/Manage electronic commerce (10870)
• 9.6.1.3 - Audit invoices and key data in AP system (10871)
• 9.6.1.4 - Approve payments (10872)
• 9.6.1.5 - Process financial accruals and reversals (10873)
• 9.6.1.6 - Process payables taxes (10874)
• 9.6.1.7 - Research/Resolve payable exceptions (10875)
• 9.6.1.8 - Process payments (10876)
• 9.6.1.9 - Respond to AP inquiries (10877)
• 9.6.1.10 - Retain records (10878)
• 9.6.1.11 - Adjust accounting records (10879)