Log In Contact Us. The Human Cost There is an undoubted human cost when it comes to trying to figure the average cost to process an invoice, particularly in companies that primarily use paper-based processes. Why AP Automation Lowers the Average Cost to Process an Invoice Cloud-based AP automation solutions help to reduce the time previously wasted on processing paper invoices, ensure on-time payments, and improve capital management.
Other Benefits of Switching to AP Automation Overhauling the AP process sounds overwhelming, especially if all it will save you is a few minutes of time and a few bucks per invoice. Consider the following: Significant labor savings and productivity: You can save on labor costs for AP employees and other staff like approvers, managers, and mail deliverers. And when employees spend less time on menial tasks like data entry, they have more time to focus on strategic goals, like improving spotting opportunities to save money.
Fewer late fees and more early pay discounts: A streamlined approvals process means your company will be better able to take care of early-pay discounts and build a stronger relationship with your vendors — which could result in additional savings down the line. Improved accuracy: Manual processes are more likely to introduce mistakes. With AP automation, invoices can be imported automatically, which helps prevent costly mistakes like duplicate payments.
Reduced fraud risk: Many AP automation software solutions make it easier to spot fraud. Stampli, for example, centralizes conversations on a digital invoice, so everyone stays in the loop and is easily accessible for audit purposes. The Bottom Line Companies using AI-based automated invoice management software see their invoices several times faster.
How Stampli Can Help Lower Your Average Cost to Process an Invoice For any company ready to start saving time and money every time they process an invoice, Stampli excels in the general areas where many AP automation providers thrive and then brings some of its own specialties to the table.
Billy the Bot: Friend of Frugality Stampli also leverages artificial intelligence and machine learning, via its own creation, Billy the Bot which can eliminate traditional elements of the average cost to process an invoice like data entry. Easy and Affordable Cloud-Based Implementation One other thing worth noting: Sometimes, the average cost to process an invoice is high because a company has to factor in how much it cost to build a custom, on-premises system.
All your AP news in one place. Join our Newsletter Sign up today and be the first to get notified on new updates and more! In fact, if the investment in automation costs less than the returns on invoice processing — which it almost always does — invoice automation is undeniably valuable. But there are also other hidden "costs" such as vendor relationships, late fees, missed early discounts, and cashflow lag that can eat away at profits and disrupt workflows in seemingly unrelated departments.
In a nutshell, the cost of processing invoices matters because it directly impacts your entire business. But understanding the costs of manual processing also helps you know whether or not investing in IT solutions for AP makes sense in your specific business ecosystem. To help uncover all of these costs in detail, let's look at the standard manual invoice processing workflow. As a forewarning, we're demonstrating a "typical" traditional invoice processing workflow.
However, there are certainly exceptions to this rule. For businesses that have yet to adopt high-level automation and digitization, invoice processing workflows may be overly complicated and filled with unnecessary steps.
For the purposes of this, we're focusing on the elemental steps of the invoice processing framework. By breaking down the invoice costs into buckets, you can better identify just how deeply ingrained invoice processing is in your overall business ecosystem. It's important to remember that there are additional costs such as office supplies, space for paperwork, filing, security, compliance, and more that add to these costs, but we consider those to exist throughout all layers of your AP system.
However, automation solutions will reduce or eliminate these costs in addition to the costs listed below. While it may seem a little bizarre to incur costs before the invoice is ever sent to your department, it's actually common. Errors on the supplier side can lead to inaccurate or duplicate invoices. Obviously, this is an issue that should be caught during your reception or approval process, but the thread leads back to suppliers. If you still deal with paper-based invoices the majority do , you also have mail frictions to consider.
Mail gets lost. And, when invoices are lost in the mail, it creates trust frictions between you and your vendors — not to mention tensions surrounding early payment discounts and late payment fees. These are all cost buckets. And they're difficult costs to quantify. Degraded vendor relationships due to overpayments, duplicate payments, and lost mail can lead to supply chain pain points that create headaches across your business ecosystem. The costs of these headaches can range from inconsequential to egregious.
It depends on the nature of the vendor, the degradation of the relationship, and how integrated that vendors product or services are in your workflows. The simple truth is that paper-based workflows sap revenue.
And that revenue is semi-tangible. And, when you factor in the intangible costs i. Once an AP professional has the right invoice, they need to systematically record all of that invoice data into their ERP. Depending on the ERP, data generation may be easy, or it may be incredibly time-consuming. Either way, manually inputting data introduces errors.
Industries most affected by the crisis are rapidly becoming the first movers of de-risking their businesses with automation. For example, Procede Software , a firm servicing the commercial trucking industry has implemented AP automation to reduce cost and help their finance team work remotely. Look for this trend to continue as finance leaders become laser focused on reducing cost, increasing efficiency, reducing risk and supporting remote work.
In a traditional model, an accounting professional would be entering data for all the incoming invoices, sorting them into specific batches, matching to a PO, coding, and following up with managers for approval. With the current crisis, how is your accounting team managing these operations remotely? How much time and money are you spending with manual invoicing? Get an estimate by examining the time your team spends on each of these tasks.
Try the Calculator. Real-time access to invoices: Printed invoices provide no quick access to data, costing time and money spent filing and looking up paperwork, especially during an audit.
Beanworks stores all invoices digitally, and has a global search that lets you quickly lookup invoices based on any filter you type in, such as vendor, invoice number, or amount. An image of each invoice is also stored in the system and readily available. This makes internal and external auditing a lot more efficient and fast. An automated AP process not only relieves your finance team from manual, repetitive tasks but also allows them to keep critical AP operations running as they should in a remote setting with minimal costs.
From start to finish, an accounts payable solution is able to capture, route, code, request approval, and ensure payments get sent to the right supplier in a timely manner. The risk of errors, fraud, and late payments are mitigated and the cost to process a single invoice is significantly reduced.
The cost of processing an invoice is a key metric for evaluating accounts payable overhead for any business. This is why the cost to process an invoice is such a key metric. Doing a cost per invoice analysis is also a key step to take before pitching new AP automation software to your executive team. Learn more about making a business case for AP automation.
Based on the numbers we just gave, it seems obvious to say that higher costs for processing an invoice generally come from manual processes, but to be specific, this basically breaks down into these five costly factors in the AP process.
To get an accurate cost per invoice for a business, you will have to do a detailed analysis.
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