Invoice Processing Time
Average number of days from invoice receipt to payment processing
What is Invoice Processing Time?
Invoice processing time is the average number of days from receiving an invoice to paying it. It shows how quickly accounts payable moves invoices through approval and payment.
Slow processing risks late payment and supplier friction, while processing too fast can give up cash-holding benefits.
How this KPI is measured
- Function
- Finance
- Sub-function
- Accounts Payable
- Industry
- All Industries
- Type
- Lagging
- Impact
- Efficiency
- Unit
- days
- Measurement frequency
- Monthly / Quarterly
- Formula
- Sum of days from invoice receipt to payment / Number of invoices processed
How to calculate it
Add up the days from invoice receipt to payment and divide by the number of invoices processed.
For example, if 500 invoices took a combined 15,000 days, the average is 30 days.
Compare against payment terms, and look at each stage, such as capture, coding, approval and payment, to see where time is spent.
Where it is used
Improving efficiency
Find bottlenecks.
Avoiding late payments
Meet terms.
Managing working capital
Pay on the due date, not before.
How to improve it
Tips and common mistakes
- Faster is not always better for cash. Pay on the due date.
- Watch invoices stuck in approval.
- Compare with payment terms.
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