Let's talk about one sneaky metric that reveals a lot about how healthy your accounts payable process is: the PO match rate.
This little number shows the percentage of supplier invoices that actually line up with a purchase order you have on file. Seems simple, but it spotlights how buttoned up your procurement and invoicing systems really are.
Boosting your PO match rate unlocks huge wins:
- Major cost savings and efficiency gains
- More working capital and flexibility
- Happier suppliers and partnerships
- Rich data to guide spending decisions
This quick guide will cover:
- How the PO match rate gets calculated
- The benefits of hitting a high match %
- Actionable steps you can take to optimize your process
Getting your match rate humming uncovers big opportunities to strengthen your systems, free up cash flow, and make suppliers love working with you. Let's do this!
First, let's look at how the PO match rate gets calculated.
It's pretty simple - you take the number of incoming supplier invoices matched to a PO you already have on file, divided by the total invoices you received that month. Then multiply by 100 to get that match percentage.
For example, say you get 500 supplier invoices in one month. Your stellar team is able to match up 425 of those to an existing PO from your files. Here's the math:
PO Match Rate = (425 matched invoices / 500 total invoices) x 100 = 85%
You'd love to see that match rate as close to 100% as possible. That means all supplier invoices went through the proper upfront ordering process tied to a PO. No surprises!
Getting close to a 100% match rate takes work. But even moving from 50% to 80% matching through workflow improvements generates huge advantages.
Let's walk through those benefits...
Shooting for a high PO match rate drives tons of wins across your business.
- Killer visibility and control over spending - The upfront PO process lets you lock in limits, rates, approvals to manage costs proactively.
- Way fewer invoice exceptions - Mismatches mean manual intervention that drags things out and irks suppliers. Matching to POs smooths everything out.
- Effective analytics power - Tying invoices directly to PO details allows spending trend tracking, supplier performance, and other cool reports.
- More early payment discounts - Suppliers link discounts to clean PO references on invoices. More matches = more savings!
- Buttoned up compliance - PO validation adds a handy control to ensure purchasing stays within policy guardrails and contract rates.
- Lower risk - PO systems enforce limits and access to prevent unauthorized overspend. Higher match rates take advantage of those controls.
- Happier suppliers - Vendors love getting paid fast with clean 2-way or 3-way matching. That earns you loyalty points and flexibility.
Start with these proven tactics to optimize your PO match rates!
Moving just 10-15% more of your total spend through the PO process presents one of the biggest opportunities to strengthen systems and boost savings. Here's how:
- Root cause analysis - Audit unconventional invoices to spot patterns in why POs are missing. Address those root issues.
- Mandate POs - Require buyers to create POs for all supplier spend, even smaller purchases. Automate PO creation if you can.
- Incentivize compliance - Create formal procurement policies with PO rules and hold team members accountable to follow them.
- Upgrade technology - Reduce manual work for buyers by implementing slick new procurement tools, payment cards, and PO auto-send to suppliers.
- Clean your data - Keep supplier names, item codes, quantities and other PO/billing details aligned and up-to-date for easy matching.
- Refine match settings - Review the match logic and required fields to balance process control with match rates.
- Track and report - Circulate PO match rates and trends with stakeholders to keep focus on driving this KPI higher and higher.
Using POs to their full potential smooths out processing, reduces risk, scores discounts, and powers data-fueled decisions.
Calculating and maxing out your PO match rate is the fastest way to start optimizing the procure-to-pay process.
Make it a monthly habit to:
Monitor match rates
Spot process gaps limiting performance
Implement technology and workflow tweaks to bump up rates
Getting above 95% matching should be the goal - it drives huge quantifiable value.
Bottom line, the PO match rate is a game changing metric for assessing and improving how tight your systems really are.
Consistently keeping rates optimal will strengthen your business from both an operating cost and working capital perspective.
Now you've got the scoop on what the PO match rate shows, why it matters, and how to leverage it to take your procurement strategies to the next level! Let's connect on benchmarking your current match rates and finding the right solutions to power improvements.
Integratz helps leading B2B distributors improve supplier pricing and invoicing processes to strengthen visibility, cycle times, accuracy, and their bottom line. We work with your current systems to identify the right processes and reduce wasteful ones, build secure and stable automated workflows, and bridge the gap between new and existing systems. If you have struggled with invoice processing and you’re noticing a hit on your bottom line, reach out to our professionals. Set up a time to talk to our team and learn more!