Of course, it’s a necessary task, but it does use precious resources for no real return and it makes sense to look at a way to minimise this cost to your business both financially and in terms of staff time.
According to ABBYY New Zealand, the average cost of paying an invoice here is $15 per invoice. At first glance this seems excessive, but a quick Google search shows that it stacks up with estimates internationally, and is even a little lower than most estimates we found, when converted to New Zealand dollars. ABBYY found that exceptionally efficient systems spent only $2.90 paying each invoice, and the most inefficient ones up to $90 – which may mean that in some cases the cost of paying the invoice was more than the actual invoice itself!
If you process 500 invoices per month in your business, and it costs the average of $15 per invoice – that’s $7,500 per month or a scary $90,000 per year! Most of this cost is spent in the data entry phase.
A typical process can include many steps, some of them hidden:
Automating the process can reduce that $15 per invoice by up to 70%. That means if your company processes as few as 500 invoices per month you can expect up to $63,000 in savings annually.
This is not taking account of hidden costs such as late payment penalties, or loss of early payment discounts which may occur if it takes too long for an invoice to work its way through your system, so the true savings may be much higher.
For a very rough estimate, simply divide the number of invoices processed annually by the total salaries of those in Accounts Payable. This will not be an accurate estimate but it’s a start, and enough to give you a sobering figure to look at. The real figure will be higher.
Or, use this process to calculate a little more accurately.
Of course there are also other costs involved that may complicate this process, but it’s not necessary to include those. With an estimate worked out in this way, you will have good information that you can now work on – and work on reducing!
To help you out we have created a free calculator to help you estimate how much it is costing your business to pay invoices.
One word. Automation.
In this day and age there is no need for people to do what computers can do more easily, quickly, accurately and at a fraction of the price.
Software like Fetch will read the information on your invoices, do some initial matching and calculation checking, apply your business rules and facilitate coding. Once processed, Fetch will save your documents in a fully searchable format in a folder structure that suits you.
Your staff simply have to verify that the information is correct and let Fetch do the rest! It’s fast, easy and the more you use it, the better and faster it gets as it learns as it goes.