Vendor Invoice Error Rate

Vendor Invoice Error Rate

KPI Details

Vendor Invoice Error Rate measures the percentage of invoices sent to the Accounts Payable (AP) Department by vendors that contain an error of some kind. Common vendor invoice errors include incorrect amounts, missing vendor information (e.g., supplier number, tax identification ID, address, contact name, etc.), incorrect charge codes or incorrect bank account information (e.g., routing number, etc.). Clearly defined and communicated invoicing format and content standards can reduce the amount of inbound errors within vendor invoices. Electronic invoice submission methods may also reduce inbound errors. An excessive volume of invoice errors reduces AP employee productivity and, if left unchecked, may lead to time consuming, costly disputes with vendors.

KPI Definition

The number of invoices sent to the Accounts Payable (AP) Department by company vendors/suppliers that contain an error(s) divided by the total number of vendor invoices received by the AP Department over the same period of time, as a percentage.

KPI Best Practices

• Setup regular orders with regular payments to vendors when possible
• Thorough checklists should be used to ensure vendors submit necessary information
• Send vendors detailed error reports by type and frequency to reduce number of errors

KPI Calculation Instructions Vendor Invoice Error Rate?

Two numbers are used to calculate this KPI: (1) the number of invoices received by the Accounts Payable (AP) Department from vendors containing one or more errors, and (2) the total number of vendor invoices received by the AP department over the same period of time. Vendor invoice errors include, but are not limited to, incorrect amounts, missing or incorrect vendor information, invoices sent to the incorrect location (physical location or electronic submission), or a misrepresentation of services rendered (e.g., incorrect line items, service descriptions, etc.). A single invoice with multiple errors should counted only once in the numerator for this calculation. Include both paper and electronic (email, EDI, etc.) invoice submissions in this calculation.

KPI Formula :

(Number of Vendor Invoices Containing an Error / Total Number of Vendor Invoices Received) * 100