From Process Analysis to Financial Control

The Finance department has access to an ever-increasing amount of data from the purchase-to-pay process. Purchase orders, receipts, invoices, approvals, payments, supplier data, and general ledger entries each reveal a part of the same financial chain.

Yet in many organizations, reporting remains limited to the end result. How many invoices have been processed? How many are still outstanding? How much was spent this month? What is the outstanding accounts payable balance?

That information is useful, but it says little about the quality of the process that preceded it.

Why does invoice processing take longer in one business unit than in another? Which suppliers consistently cause discrepancies? Where are approvals getting held up? Which invoices are being processed without a purchase order? Which costs belong to the current period but haven’t been posted yet? And which obligations will result in actual cash outflows in the coming weeks?

As a result, Purchase-to-Pay reporting directly impacts the work of Financial Control. The same data that reveals insights about the efficiency of Accounts Payable also provides insights into costs, liabilities, cash flow, the completeness of the records, and financial risk.

The value of reporting therefore stems not only from revealing what has happened, but above all from explaining why it happened and where action is needed.

From KPIs to Process Analysis

A Purchase-to-Pay process consists of a series of events. A request is submitted, a purchase order is created, goods or services are received, an invoice is received, reviewed, and approved, and finally, payment is made.

Each step generates data.

By linking these events together, a much richer picture emerges than when looking only at invoices or general ledger entries.

For example, a report might show that the average processing time for an invoice is eight days. For process improvement, it’s particularly important to understand where those eight days come from.

Perhaps the invoice is automatically recognized within a few minutes, but then sits with a budget holder for five days. Perhaps it mainly involves invoices without a purchase order. Perhaps goods received aren’t recorded in a timely manner. Or perhaps there are constant price discrepancies with one supplier.

An average KPI is then only the beginning of the analysis.

This is also where process mining comes into play. It uses timestamps and events from ERP, procurement, and invoice processing systems to reconstruct how transactions actually flow through the process.

This can reveal process variations that are barely noticeable in a standard workflow: purchase orders created only after the order is placed, purchases from non-preferred suppliers, invoices that pass through the same workflow multiple times, or systemic delays with certain approvers.

McKinsey describes process mining, among other things, as a means of identifying such deviations in the Source-to-Pay process. In a real-world example at a chemical company, analysis of P2P data led to reduced maverick spend and a higher degree of automation. [1]

This perspective is relevant for Financial Control because operational deviations often have financial consequences as well.

A large number of purchase orders created retroactively may indicate insufficient control over obligations. A backlog of blocked invoices can affect the completeness of the month-end close. Systematic price discrepancies may indicate poor contract or supplier management.

Reporting thus becomes a tool for control, not just for reporting.

Analyze exceptions, not just volumes

Accounts Payable lends itself well to process analysis because virtually every step is measurable.

Consider processing time, approval time, touchless processing, PO matching, the number of exceptions, duplicate invoices, credit memos, and the percentage of invoices that can be processed without human intervention.

APQC also uses these types of indicators for benchmarking. In the current cross-industry data, the median time between invoice receipt and registration in the AP system is twelve hours. The median time from receipt to approval for payment is five calendar days. [2]

But the distribution behind the average is usually more interesting.

If 80% of invoices are processed within one day and 20% take more than two weeks, an average processing time is not very meaningful.

That is why it must be possible to break down the analysis by supplier, entity, business unit, approver, cost category, invoice type, and process route.

This raises the follow-up question: Which transactions are causing the delays?

The same applies to PO matching. APQC reports a cross-industry median of 85% of supplier invoices that can be linked to a purchase order. [3]

That percentage, too, is not a goal in and of itself. A manufacturing company has a different profile than an organization that purchases a lot of professional services.

What’s more interesting is why invoices can’t be matched.

Is a purchase order missing? Was the order only recorded afterward? Does the amount differ? Was the receipt not posted? Or is it a category for which the current purchase order structure simply does not work well?

Exceptions should not be viewed exclusively as AP work.

When hundreds of invoices are blocked because goods receipts are missing, the problem likely does not lie with Accounts Payable. When price discrepancies consistently occur with the same suppliers, the problem is more likely to lie in contract terms, catalog data, or supplier performance.

The relevant KPI, then, is not just how many exceptions are resolved, but why they arise in the first place.

Supplier Analysis: From Spend to Performance and Risk

Purchase-to-Pay data also makes it possible to evaluate suppliers from multiple perspectives simultaneously.

The first layer is spend.

How much is spent with each supplier? Which business units purchase from the same supplier? How does spend evolve over time? How dependent are we on a limited number of suppliers?

By combining purchase order, invoice, Accounts Payable, and general ledger data, a more complete picture emerges than when looking solely at contract value or recorded costs. McKinsey emphasizes precisely this combination of data sources in spend analytics. [4]

The second layer is process performance.

How often do invoices deviate from the purchase order? How many credit memos are received? Which suppliers require a relatively high amount of manual intervention? Which suppliers’ invoices are frequently blocked?

This also reveals hidden process costs.

A supplier may seem commercially attractive, but at the same time cause a lot of administrative work due to incorrect references, price discrepancies, or incomplete invoices.

The third layer is financial risk.

How much spend is concentrated with a single supplier? How important is that supplier to operations? Have payment terms changed? Is the volume of outstanding items increasing rapidly? Are delivery issues arising?

Internal data can also be combined with external information regarding, for example, creditworthiness, sanctions, geographic risk, or other third-party risks.

Reporting on suppliers is thus more than just a “top 10” list based on spend.

For Financial Control, the ultimate question is: What financial dependencies and risks lie behind the accounts payable portfolio?

Accounts Payable as Part of Cash Flow Analysis

An outstanding supplier invoice is not just administrative work. It is a future cash outflow.

As such, Accounts Payable forms a direct link between P2P and working capital management.

An accounts payable list shows which invoices have not yet been paid. Cash flow management requires more than that.

When are the invoices due? Which payments have already been approved? Which large invoices are still in the workflow? Which purchase orders represent future obligations for which no invoice has yet been received?

Bringing this data together provides a clearer picture of future outgoing cash flow.

This is particularly relevant when large amounts are concentrated at specific times or when Finance actively manages liquidity.

The size of working capital makes it clear why this is important. For its 2025 European Working Capital Survey, The Hackett Group analyzed the 1,000 largest European non-financial companies. According to the study, these companies had approximately €1.4 trillion in excess working capital tied up. [5]

Accounts Payable is one of its components.

Reporting can therefore also show whether invoices are paid within the agreed-upon terms, how many payments are made earlier than necessary, and how many invoices are actually paid late.

In this regard, a controller must look beyond just Days Payable Outstanding.

A higher DPO can improve liquidity, but consistently paying as late as possible can strain supplier relationships or compromise supply reliability. With a strategic supplier, paying earlier may be desirable. With another supplier, on the other hand, a longer agreed-upon payment term may be utilized. Sometimes, an early-payment discount is financially more attractive than holding onto cash.

Good reporting enables this assessment based on the supplier, contract terms, volume, and risk.

P2P data strengthens the month-end closing process

Purchase-to-Pay data becomes particularly important as the end of the month approaches.

At that point, it’s not just about process performance, but about the completeness of the records.

An invoice may still be in an approval workflow even though the expenses belong to the current month. Goods may have already been received, while the invoice will follow later. Services may have been provided without the final invoice amount being known yet.

This leads to accruals.

It is precisely here that procurement, goods receipt, and AP data can together form a much better basis for month-end closing.

Outstanding purchase orders show which commitments have been made. Goods receipts show what has already been delivered. Invoice data shows what has already been processed financially. Contract data can provide information about periodic services and recurring costs.

The relevant question for Financial Control is therefore not just: Which invoices are missing?

The better question is: what economic activities have taken place during this period for which full financial processing has not yet been completed?

This makes it possible, for example, to identify goods received without an invoice, services rendered, invoices in the workflow, and outstanding obligations prior to closing day.

APQC currently reports a cross-industry median of eight days to complete the month-end closing. [6] Speed is not the primary goal here, but manually searching for missing costs adds little value.

Reporting can bring that work to the forefront.

Controllers can already see during the month which material invoices are on hold, which receipts have not yet been invoiced, which large purchase orders are outstanding, and where amounts deviate from historical patterns.

Artificial intelligence (AI) can also provide support in this regard.

If a supplier invoices a similar amount every month and the relevant invoice is missing just before the period-end, the system can flag this as a potential accrual. The controller then assesses whether an actual entry is necessary.

The role of Financial Control thus shifts from gathering information to assessing exceptions and materiality.

From reporting to continuous control

Much of financial reporting is still organized on a periodic basis.

At the end of the week or month, data is collected, presented in a dashboard, and discussed. Afterward, any discrepancies requiring attention are investigated.

With integrated P2P data, analysis doesn’t have to wait until that moment.

An anomaly can be flagged as soon as it occurs.

Think of an invoice amount that deviates significantly from a supplier’s historical pattern, a sudden drop in the match rate, an unusual increase in open invoices, or a large amount that has been with the same approver for days.

Checks for duplicate invoices, inconsistent bank details, and unusual payment patterns can also be performed closer and closer to the transaction.

This gives rise to exception-based reporting.

The financial controller does not need to constantly monitor every dashboard. Instead, the system highlights the transactions, suppliers, or processes that deviate from what is normal or acceptable.

KPMG describes a similar development around the financial close: reconciliations, accruals, transaction quality, and exceptions can be monitored throughout the period, causing organizations to increasingly move toward a continuous close. [7]

The same principle applies to Purchase to Pay.

A slow approval workflow is then not just an AP KPI, but potentially a risk to the close. A supplier with many discrepancies is not just a procurement issue, but can impact costs, cash flow, and operational risk. An open purchase order is not just an order detail but also information about a future obligation.

This makes reporting an integral part of financial control.

Not because Finance needs more dashboards, but because the data from Purchase to Pay reveals how processes ultimately impact the financial figures.

The greatest value, then, lies not in looking back, but in seeing earlier on where process quality, cash flow, and financial risk begin to diverge.

Sources and References

1. McKinsey & Company, A Next-Generation Operating Model for Source-to-Pay. On process mining, deviant process routes, and analysis of Source-to-Pay processes. mckinsey.com
2. APQC Open Standards Benchmarking, Accounts Payable benchmarks for processing time between invoice receipt, entry, and approval. apqc.org
3. APQC, Percentage of supplier invoices matched with the purchase order. Cross-industry benchmark for PO matching. apqc.org
4. McKinsey & Company, “The role of spend analytics in the next normal.” On combining procurement, invoice, AP, and general ledger data. mckinsey.com
5. The Hackett Group, 2025 European Working Capital Survey. Research on working capital among the 1,000 largest European non-financial companies. thehackettgroup.com
6. APQC Open Standards Benchmarking, “Cycle Time in Days to Complete Monthly Financial Close.” apqc.org
7. KPMG, “Take Command of the Financial Close,” 2026. On continuous close, accruals, reconciliations, and exception-based control. kpmg.com