All companies must process invoices. It’s just a part of doing business. To understand exactly how much invoice processing costs your business, you must look at the entire invoice processing cycle.
For some companies, processing accounts payable is a time-consuming, detail-intensive function. For others, it’s a quick and easy task.
The cost to process an invoice is the most basic metric, but in many cases, one of the more difficult to assess. The challenge is to obtain an apples-to-apples comparison of the process steps included in the cost calculation. Some studies include costs associated with routing, mailroom activities, copying and follow-up. This is where benchmarking studies can be particularly useful given their ability to employ a consistent definition in their cost analyses. Even with that consistency, cost studies show a wide range of operating results. One benchmarking study calculated the cost to process a vendor payment ranging from $5 to $26 an invoice, while another study cited the cost ranging from $4 to $14 an invoice. Interestingly, there is little correlation between the cost to process an A/P invoice and the size of the company.
1. Too many manual processes
On average, businesses receive 63 percent of their invoices as paper. The rest are either through email, fax, or other electronic formats. In nearly all cases, when invoices are received via email or electronic they are copied and distributed.
Manually distributing and processing paper invoices results in lost or misplaced invoices, long approval and exception-resolution cycles, late fees, missed discounts and duplicate payments.