Updated 7/18/25
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. And in 2025, that number is only climbing due to inflation, compliance pressure, and rising labor costs.
So what’s driving this cost? And how can your business reverse it?
This blog breaks down:
- The real 2025 cost of invoice processing
- Hidden expenses that most companies overlook
- Why paper-based AP is a financial liability
- How switching to paperless AP unlocks immediate and long-term ROI
- The true total cost of ownership (TCO) of automation
How Much Does it Really Cost to Process an Invoice in 2025?
The true cost of processing a single invoice varies by company.
Current estimates put the average cost to process a paper invoice between $16 and $23, depending on company size, industry, and process maturity. For organizations without automation or integrated systems, this figure can climb well above $25.
A 2024 industry report from PayStream Advisors found:
- Top-performing (automated) AP teams: Avg. cost per invoice = $3.18
- Manual-based AP teams: Avg. cost per invoice = $19.83
That’s a 522% cost difference between automated and manual invoice processing.
Why? Because paper invoices involve dozens of micro-steps, each with its own cost:
- Receiving mail or emailed invoices
- Manual data entry into ERP
- Routing for approval via email or paper
- Chasing down missing information
- Printing, filing, storing, and archiving
- Handling exceptions or payment disputes
- Auditing with physical document review
Hidden Costs That Inflate Manual AP Even Further
The cost of processing an invoice isn’t just about stamps and envelopes. In today’s digital, security-conscious business environment, manual processes also introduce high-risk and high-cost liabilities, including:
Cybersecurity Costs
- Paper and email-based AP systems are more vulnerable to fraud, phishing, and invoice scams.
- According to IBM, the average cost of a data breach in 2024 is $4.45 million, and finance departments are prime targets.
- Paper-based approval chains are harder to secure and track.
Compliance and Audit Risk
- Manual processes increase the risk of missing records, non-compliance with SOX and state-level privacy laws, and costly audit findings.
- Regulatory penalties and remediation costs can quickly outweigh any perceived savings of staying paper-based.
Data Storage and Backup Costs
- Physical storage requires space and organization.
- Offsite storage, document retrieval, or digital backups of scanned documents add recurring costs.
And when finance teams need to locate a specific invoice during an audit or dispute, every minute spent searching through filing cabinets or disconnected archives adds up fast. Explore the hidden costs of manual document retrieval to understand just how much those delays are costing your business in time, money, and lost productivity.
Energy and Facilities Costs
- The cost of electricity, HVAC, and floor space for filing cabinets, printers, and copiers has risen substantially.
- As of 2025, businesses spend an average of $8–$12 per square foot annually to store paper files, cost that disappears with digital AP.
Read more: Why You Should Transition Accounts Payable To Paperless
Paper Prices and Postage Are Also Up
Inflation and supply chain disruptions have made even the smallest line items add up.
Price Increases Since 2022:
- Printer paper: up 18%
- Postage stamps: up 12%
- Ink/toner cartridges: up 24%
- Document shredding & disposal: up 15%
For companies still printing hundreds or thousands of invoices a month, these costs are no longer marginal, they’re major.
Opportunity Cost: What Manual Processing Is Really Stealing
Your team’s time is valuable, and limited. Every hour spent manually processing invoices is an hour not spent on:
- Analyzing vendor spend
- Negotiating better payment terms
- Forecasting cash flow
- Contributing to strategic finance initiatives
With finance labor costs up across the board and talent shortages widespread, these opportunity costs have never been higher. Automation frees your skilled people to focus on work that moves the business forward.
The Power of Paperless: Where Savings and Strategy Meet
Going paperless isn’t just about cutting costs, it’s about transforming your AP department into a streamlined, secure, and strategic asset.
A paperless AP system:
- Reduces invoice processing time by up to 70%
- Cuts errors and duplicate payments
- Enables remote approvals and mobile access
- Ensures secure, trackable workflows
- Enhances audit readiness with searchable records
- Unlocks early payment discounts with faster processing
- Aligns with sustainability and ESG goals
Best-in-class AP departments using automation spend just $2–$4 per invoice, an 80%+ reduction compared to manual processing.
Total Cost of Ownership (TCO): What to Expect with AP Automation
Still concerned about implementation costs? Let’s look at a 3–5 year TCO model for a mid-sized company processing 25,000 invoices annually:
Cost Category | Manual AP (3 Years) | Automated AP (3 Years) |
Invoice Processing Costs (@$20 avg) | $1,500,000 | $187,500 (@$2.50 avg) |
Staff Labor (AP clerks & supervisors) | $420,000 | $250,000 |
Supplies, Printing, Storage | $78,000 | $12,000 |
Audit & Compliance Overhead | $60,000 | $15,000 |
Total 3-Year Cost | $2,058,000 | $464,500 |
That’s a potential savings of over $1.5 million in just three years.
Manual AP is a Liability You Can Eliminate In 2025, sticking with paper isn’t just inefficient; it’s expensive. From hidden operational costs to rising compliance risks and sustainability expectations, manual AP is costing you more than you think.
A modern, cloud-based AP automation solution gives you:
- Reduced per-invoice costs
- Stronger data security and compliance
- Greater visibility and faster approvals
- Long-term ROI across labor, supplies, and space
Contact Mosaic today to learn how we help businesses eliminate waste, reduce cost, and digitize AP the right way.
Looking to take the next step? Read our guide: Successful AP Automation Implementation: Solving Common Challenges with Preparation and Collaboration
