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AP Performance Narrative Agent

Analyzes AP KPIs and trends to generate executive-ready performance narratives and insight summaries.

About the Agent

Preparing accounts payable performance reports often requires time-consuming manual work: collecting metrics, investigating anomalies, and crafting clear explanations for executives. This can delay insight delivery and produce inconsistent narratives.

The AP Performance Narrative Agent analyzes transaction data, ledgers, analyst notes, and external benchmarks to extract key KPIs, identify anomalies, and determine probable root causes. It then produces concise, narrative-style explanations that highlight trends, risk factors, and cash-flow implications. Reports include supporting evidence from invoice attachments, audit trails, and source documents so narratives remain factual and audit-ready.

By moving the focus from data assembly to insight consumption, the agent reduces reporting effort, shortens delivery cycles, and improves consistency in executive reporting. Finance leaders receive timely, actionable narratives that support decision-making and compliance review.

Accuracy
TBD

Speed
TBD

Input Data Set

Sample of data set required for AP Performance Narrative Agent:

Memorandum: AP Performance Reporting – Q3 2024

To: AP Performance Reporting System
From: John Doe, Senior AP Analyst, InnovateCorp
Date: October 5, 2024
Subject: Raw Data and Preliminary Notes for Q3 2024 AP Performance Analysis


1. Aggregated KPI Summary

Metric Q3 2024 Q2 2024 Change Observation
Days Payable Outstanding (DPO) 46 45 +1 day Slight increase in average payment time.
Total Invoices Processed 12,540 10,980 +14.2% Higher volume than forecasted, increasing workload.
On-Time Payment Rate 87% 94% -7 pts Significant decline requiring root-cause analysis.
Early Payment Discounts Captured $45,200 $68,500 -34% Missed discounts likely due to delays and exceptions.
Invoice Exception Rate 9.5% 6.0% +3.5 pts Higher exceptions impacting throughput and accuracy.

2. Analyst Observations

  • The on-time payment rate decline is a key concern. Early indications point to onboarding issues with Quantum Dynamics, which became a major supplier starting in July.
  • A large volume of invoices from Quantum Dynamics contained incorrect PO numbers and incomplete line-item data, leading to delays in validation and increased exception queue volume.
  • The invoice volume surge (+14.2%) exceeded forecasts, contributing to operational strain and processing delays.
  • The reduction in early payment discounts captured suggests a need to quantify the financial impact of late payments and strengthen discount capture processes.

3. Exception Log Highlights

Exception ID Vendor Invoice No. Issue Type Amount Days in Queue
77401 Quantum Dynamics QD-2024-9811 PO Mismatch $150,000 18
77492 Apex Solutions AS-INV-0043 Duplicate Invoice $22,500 4
77531 Quantum Dynamics QD-2024-9904 Missing GRN $88,000 15
77610 Quantum Dynamics QD-2024-10012 PO Mismatch $125,700 12

4. Preliminary Insights for Q3 Analysis

  • Vendor Onboarding Impact: The Quantum Dynamics onboarding issues appear to be a significant driver of increased exception rates and delayed payments.
  • Process Capacity: Invoice volume growth exceeded current processing capacity, suggesting a need to reassess staffing or automation levels.
  • Financial Leakage: Missed early payment discounts indicate potential working capital inefficiencies worth quantifying and addressing.
  • Exception Resolution Priorities: High-value exceptions (notably from Quantum Dynamics) require expedited review to minimize financial and operational risk.

Next Steps:

  • Conduct a detailed root-cause analysis of exceptions associated with new vendors.
  • Quantify financial impact of missed discounts and delayed payments.
  • Review process capacity and automation needs ahead of Q4.
  • Engage procurement to improve data quality and PO accuracy from key suppliers.

Deliverable Example

Sample output delivered by the AP Performance Narrative Agent:

Accounts Payable Performance Report: Q3 2024

Executive Summary

InnovateCorp's Accounts Payable department processed a 14% increase in invoice volume during Q3 2024 while maintaining a stable Days Payable Outstanding (DPO) at 46 days. Performance challenges included a decline in on-time payment rate to 87% (from 94% in Q2), driven primarily by onboarding issues with a new key vendor, Quantum Dynamics. This led to increased invoice exceptions and a 34% reduction in early payment discounts captured. The report details root causes, financial impact, and a predictive outlook for Q4 2024.


Quarterly KPI Dashboard

Key Performance Indicator Q2 2024 Q3 2024 Change Trend
Days Payable Outstanding (DPO) 45 Days 46 Days +1 Day Stable
Total Invoices Processed 10,980 12,540 +1,560 Rising
On-Time Payment Rate 94% 87% -7% Warning
Early Payment Discounts Captured $68,500 $45,200 -$23,300 Warning
Invoice Exception Rate 6.0% 9.5% +3.5% Critical

Performance Analysis & Narrative

Root Cause Analysis: On-Time Payment and Discount Decline

  • Invoice Exceptions: Exception rate increased from 6.0% to 9.5%, primarily due to onboarding issues with Quantum Dynamics.
  • Vendor-Specific Issues: Invoices from Quantum Dynamics frequently contained PO Mismatch and Missing Goods Receipt Note errors (e.g., #77401, #77531, #77610). Average time in exception queue: 15 days.
  • Financial Impact: Late processing caused a 34% reduction ($23,300) in captured early payment discounts.
  • Volume Pressure: 14% increase in total invoice volume strained AP team capacity, slowing exception resolution.

DPO and Cash Management

Despite delayed payments, DPO remained stable at 46 days, indicating overall cash outflow and cycle management remained effective.


Exception Log Highlights

Exception ID Vendor Invoice No. Issue Type Amount Days in Queue
77401 Quantum Dynamics QD-2024-9811 PO Mismatch $150,000 18
77492 Apex Solutions AS-INV-0043 Duplicate Invoice $22,500 4
77531 Quantum Dynamics QD-2024-9904 Missing GRN $88,000 15
77610 Quantum Dynamics QD-2024-10012 PO Mismatch $125,700 12

Predictive Forecast: Q4 2024 Outlook

  • On-Time Payment Rate: Projected to recover to 90-92% as AP resolves Quantum Dynamics invoice issues.
  • Invoice Exception Rate: Expected to decrease to ~7% with corrective actions.
  • DPO: Forecasted to remain stable in the 45–47 day range.

Recommendations

  1. Vendor Collaboration: Align processes with Quantum Dynamics’ AR team to correct invoice submissions and PO matching.
  2. Process Automation: Implement automated PO validation rules for high-volume new vendors to prevent errors on receipt.
  3. Team Training: Provide AP staff training on handling Quantum Dynamics exceptions to reduce resolution time.

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