When it comes to the costs of doing business, few things are as important as the cost of processing an invoice. For many companies, this cost can be surprisingly high – often more than the invoice itself!
In this blog post, we’ll take a look at the average cost to process an invoice and explain why so much money is wasted on paper invoices. We’ll also discuss the benefits of going paperless with your invoicing process and provide steps for calculating how much your company could save by making the switch.
How Much Does it Really Cost to Process an Invoice?
The true cost of processing a single invoice varies by company.
A more recent study by Ardent Partners in 2015 shows that companies outside of the Best-In-Class pay about $17.61 per invoice. This is a hefty spend when you multiply that cost by the number of invoices your company processes annually. But why is this cost so high?
When you break down the individual steps required to process a paper invoice, it’s not hard to see how the costs can add up so quickly:
- Receiving the invoice in the mail room
- Delivering the invoice to the accounting department
- Opening the envelope and flattening the paper to enter data into the ERP
- Sending the invoice around the office for approval or scanning and emailing it for approval.
- Attaching the approved invoice to the check stub that paid it and filing in a file cabinet
All of these steps take time – and money. In fact, the cost of labor alone can account for more than half of the total cost to process an invoice!
What Goes into the Cost of Invoice Processing?
When your company manually processes invoices, you must attribute the cost of all of the labor, materials, and time that goes into that single invoice. For example, manual invoice processing requires physical paper, postage stamps, paper checks, printers, late payment fees, ink cartridges, printer maintenance, envelopes, labor costs for manual process, managerial overhead IT support, facilities, and more.
Do you want to calculate your current average invoice processing cost? To do this, add up all of the labor costs, materials costs, and other expenses associated with processing a single invoice. Once you have your total, divide it by the number of invoices processed in a given period (monthly, quarterly, etc.). This will give you your per-invoice cost.
It is easy for business owners to overlook these costs because paper and printers have been business staples for years. However, as we have moved forward in the digital age, there is no longer a need for these costly supplies.
Paperless offices that prioritize digital transformation in the AP departments see astounding cost savings in their spending per invoice by cutting out these supply costs.
Read more: Why You Should Transition Accounts Payable To Paperless
Paperless AP Can Save You Money
The good news is that there are now solutions available that can help you eliminate the waste and inefficiency of paper invoicing. A paperless accounts payable (AP) solution can save your company money in a number of ways:
- Automating the invoice processing steps
- Reducing the need for paper, printers, and other office supplies
- Enabling remote invoicing and approval workflows
- Reducing the amount of time needed to process an invoice
- Empowering your staff members to spend time tracking cash flow and KPIs to improve processes
- Capturing early payment discounts
- Improving relationships with your vendors and suppliers
On average, a paperless AP solution can lower the cost per invoice by as much as 80%!
This means that for every $30 you spend on processing a paper invoice, you would only spend $0.60 with a paperless solution.
Switching to a paperless AP process is a smart move for any business that wants to save money and improve efficiency. If you’re still processing invoices the old-fashioned way, it’s time to make the switch!
Read more: Is Paperless Accounts Payable Automation Software A Good Fit For Your Business?
How Much Could Your Business Save with Accounts Payable Automation?
Now that we’ve looked at the average cost to process an invoice and the benefits of paperless AP, you might be wondering how much your business could save by making the switch.
Try out our Paperless ROI Calculator to see how much you could be saving by going paperless today.
Impressed? We know! This information can be shocking if this is the first time you’ve considered an accounts payable department without paper, but in the digital age, we don’t have to be reliant on costly paper anymore. AP automation can save your company time and money, so start looking into the right software solution for your business today.
To learn more about the cost of processing an invoice and how paperless AP can save your company money, Contact Us today. Our team at Mosaic would be happy to show you how our software solution can help you take your AP department paperless.
What’s the next step on the road to paperless? Check out our blog Successful AP Automation Implementation: Solving Common Challenges with Preparation and Collaboration!
