September 2024: The Benefits of Benchmarking

Benchmarking is the process of analyzing one’s business practices in comparison to those of similar companies. It involves analyzing data and using that information to help guide an organization toward process improvement. Using facts rather than anecdotal information can help an organization focus on its biggest pain points — the most expensive errors and time-wasting activities — rather than spending a lot of resources on less important things that are primarily annoying.  

This month, we explore benchmarking, taking a look at how it works and its potential benefits. 

This Month’s Quick Take: A Four-Phased Approach 

APQC — the American Productivity & Quality Center — is the world’s foremost expert on benchmarking. APQC recommends a four-step approach to this important activity. Plan first to figure out what issues are most important to your organization; this requires careful internal analysis. Then collect information from organizations like yours; this may involve online research or site visits to other companies. Analyze the information you’ve acquired to determine how well others are doing what they do. Then set goals using this knowledge to adapt your processes for improvement. 

Basics of an AP Analytics Program 

Accounts payable departments have a wealth of data points they can use in developing analytics to be assessed through benchmarking. In addition to providing a step-by-step look at the process, this article suggests measurable metrics for payment, compliance and more. 

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What Metrics Should AR Measure?

AR organizations also have a variety of measurements they can use in the benchmarking process. In addition to the most familiar one — days sales outstanding (DSO) — there are plenty of others, including turnover ratio, average days delinquent, bad debt, and many others. 

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FREE WEBINAR: Benchmarking Tips & Tricks

Watch this free on-demand webinar that takes the guesswork out of benchmarking. IOFM Managing Editor, Royce Grayson Morse, will break down the fundamentals and offer practical advice on implementing benchmarking without adding to your workload. In today's uncertain environment, this webinar will help you make meaningful improvements and enhance your organization’s efficiency. 

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Benchmarking Best Practices 

Benchmarking can reveal two types of process improvement: quantitative, which is metrics-based; and qualitative, which is more process-focused. It can also be approached by several different methods of information gathering. This article explores the various options. 

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MEMBER WEBINAR: Form 1099 and 1042-S Changes and Updates for 2024 Year-end Filing 

Stay ahead of IRS changes for 2024 with our essential year-end update webinar! Join IOFM and Cokala for this on-demand Member webinar to learn about key IRS changes, including electronic filing mandates for Forms 1099 and 1042-S, updates to filing systems, and important deadlines. Don’t miss this chance to ensure your organization is ready for the upcoming tax season. 

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