It costs businesses between $27 and $30 to process a single paper or emailed (PDF) invoice, according to the Australian Taxation Office. So if your organisation is processing thousands of invoices each month, the cost of invoicing can quickly add up to more than you expect each year. As well as being expensive, when you consider the other downsides of manual and paper-based invoicing processes – inefficiency, human error, poor visibility, fraud vulnerability – it’s clear that this is no longer a viable solution for modern businesses looking to grow.
Thankfully, there’s a solution. With automation, the ATO reports that organisations can reduce their invoicing costs to less than $10 per invoice. In fact, research shows that the best performing businesses spend less than $2 USD (approximately $2.70 AUD) per invoice.
So how exactly does automated invoicing save you money? To understand this, we need to first look at the three main factors that affect the cost of invoicing.
1. The number of invoices
With greater volume comes greater processing time and, of course, costs. What’s more, manually processing invoices in large quantities is labour-intensive, often requiring more staff and time than many organisations have. This dramatically slows down the process while ramping up the cost.
But perhaps the most costly factor of being inundated with invoices is the risk for error and lack of visibility into direct spend, which can potentially damage business relationships as a result.
2. The number of approval levels
Many businesses across industries experience challenges when it comes to the invoice approval process. This is often synonymous with being resource-intensive and exhausting much of an employee’s time to either organise, access and process invoices accurately – and before their due date.
Unsurprisingly, the more approval levels an invoice has to go through, the bigger burden it places on time, productivity levels and costs, especially when each approver has to trawl through inboxes and spreadsheets. This can also take precious time away from high-level executives who are already very busy and time-poor. The good news is, the right technology can streamline approvals, reducing the cost, time and complexity associated with the process.
3. Missing or incorrect data entry
Unfortunately, human error exists and when people are plugging large quantities of data entries into a system, the risk is exacerbated. Plus, this increases the likelihood of issues and associated penalties for things such as duplicate payments, late payments, overpayments, fraud, missed discounts and forgotten credit notes. These are all products of manual processing which can seriously drive up the cost of invoicing for your company, impacting your bottom line.
It’s also an ineffective use of resources for your employees to spend hours each day punching in data, not to mention tedious and unsatisfying, making mistakes basically inevitable. Missing or incorrect data entry can also manifest into bigger issues, such as poor customer relationships, which means more wasted time and money for your business.
How automation can lead to cost savings
Already, accounts payable teams who have adopted automated invoicing are reducing the cost of invoicing in their organisations through increased efficiency, rapid approval workflows and elimination of manual entry and human error.
By investing in an invoice automation solution, you can centralise your company data to avoid errors while reducing the time spent looking for information through smart indexing systems. These can also enable your accounting teams to identify and validate customisations to an invoice more effectively.
Automation also allows for the integration of approval workflows to reduce administrative tasks and handling time. This enables a seamless, simple process that leads to better productivity and employee satisfaction.
Operating through antiquated, outdated systems can hike up the cost of invoicing for organisations. Smart businesses adopt modern technologies to create incredible opportunities to drive efficiencies and cost savings. As with all business processes, it’s also critical to continue assessing your processes and looking for areas of improvement to ensure maximum results of your cost reduction efforts.
Manual invoicing processes are labour-intensive and costly to your business. But with automation you can improve speed, accuracy and your bottom line. Find out how much you could save by automating your accounts payable process with our Invoice Automation Savings Calculator.