Updated 9/17/25
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, sometimes higher than the invoice itself. And in 2025, those numbers are only climbing due to inflation, compliance pressure, and rising labor costs.
So what’s driving these costs? And more importantly, how can your business reverse them?
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 ROI
- A total cost of ownership (TCO) comparison for AP automation
- A calculator to model your own potential savings
How Much Does it Really Cost to Process an Invoice in 2025?
The true cost of processing a single invoice varies by company, but inflation has pushed averages up across the board.
- Paper invoices (manual AP): $18–$26 per invoice (up from $16–$23 in 2024)
- Automated invoices (best-in-class AP): $2.50–$4 per invoice
A 2025 PayStream Advisors report found:
- Top-performing AP teams (automated): $3.05 per invoice
- Manual AP teams: $20.11 per invoice
That’s a 559% cost difference between automated and manual invoice processing.
The gap keeps widening because manual AP adds costs at every step:
- 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
- Exception handling & dispute resolution
- Audit prep and review
Hidden Costs That Inflate Manual AP Even Further
Cybersecurity Liabilities
Paper and email-based AP systems remain prime fraud targets. Finance departments face phishing, invoice scams, and data breaches that now average $4.6M in cost per incident (IBM, 2025).
Compliance and Audit Risk
Manual processes make it easier to lose records or miss compliance requirements under SOX, state privacy laws, and ESG mandates. The cost of penalties or remediation can dwarf any perceived savings of paper.
Data Storage and Retrieval
In 2025, physical storage costs have risen to $9–$13 per square foot annually. Add in off-site records, retrieval fees, and staff time spent hunting through files, and the real expense is staggering.
Energy and Facilities
Printers, copiers, and filing cabinets take up space, consume energy, and increase facilities overhead.
Paper, Postage, and Supplies
Since 2022, costs have surged:
- Paper: up 21%
- Postage: up 15%
- Ink/toner: up 28%
- Document shredding & disposal: up 17%
For companies handling thousands of invoices monthly, these aren’t marginal increases — they’re major.
Want to see the full breakdown of how paperless AP slashes costs? Read our in-depth analysis: The Cost of Processing an Invoice: Why Paperless AP Saves Companies Money.
Opportunity Cost: What Manual Processing Is Really Stealing
Manual AP doesn’t just cost money; it drains your finance team’s time. Every hour spent keying invoices is an hour not spent on:
- Analyzing vendor spend
- Negotiating payment terms
- Forecasting cash flow
- Contributing to strategic finance initiatives
With finance labor costs up 6.5% year-over-year and skilled talent in short supply, these lost hours are more expensive than ever.
The Power of Paperless: Where Savings and Strategy Meet
A paperless AP system transforms invoice processing from a liability into a growth driver. Benefits include:
- 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–$3 per invoice, an 80%+ reduction compared to manual processing.
Total Cost of Ownership (TCO): Manual vs Automated
For a mid-sized company processing 25,000 invoices annually, here’s a 3-year outlook:
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 | $85,000 | $12,000 |
Audit & Compliance Overhead | $65,000 | $15,000 |
Total 3-Year Cost | $2,070,000 | $464,500 |
That’s over $1.6M in savings in just three years.
Try the ROI Calculator
Want to see what automation could save your organization? Use our AP ROI Calculator to model your own costs and potential savings.
Manual AP is a Liability You Can Eliminate
In 2025, sticking with paper isn’t just inefficient; it’s expensive and risky. From rising compliance costs to inflated supply expenses, manual AP continues to drain resources.
A modern, cloud-based AP automation solution gives you:
- Reduced per-invoice costs
- Stronger data security & compliance
- Faster, visible approvals
- Long-term ROI across labor, supplies, and facilities
Contact Mosaic today to learn how we help businesses eliminate waste, reduce costs, and digitize AP the right way.
