Hidden delays that slow payments and strain cash flow: Metric of the Month

Core Insights - Investors and finance leaders are increasingly focused on cash flow management, emphasizing the need for organizations to eliminate blind spots in invoice processing to enhance liquidity [1] Group 1: Cash Flow Management - Organizations are under pressure to tighten cash cycles, as the timing of outflows impacts working capital strategy and vendor performance [1] - APQC's benchmarks indicate significant variation in payment processing times, with companies at or below the 25th percentile averaging 12 days to transmit payment after receiving an invoice, while the median company takes 15 days and upper-quartile organizations take 24 days [2] Group 2: Invoice Processing Efficiency - Shorter invoice-to-payment cycles often indicate efficient workflows and strong cash availability, whereas longer cycles may suggest process issues or strategic liquidity preservation [3] - The invoice-to-payment cycle time is a clearer measure of internal process efficiency compared to days payable outstanding (DPO), as it starts when the invoice enters the organization [4] Group 3: Identifying Payment Delays - Common issues that slow down payments include misrouting of invoices and inaccuracies in invoice details, which can lead to delays and increased workload [6][7] - Organizations may intentionally extend payment times to manage liquidity, indicating that longer cycles can reflect strategic decisions rather than inefficiencies [8]