Does it really cost $37 to process a vendor invoice?

Many small companies today are still pushing paper invoices through for payment and wasting resources in the process. When I first started researching AP costs I was flabbergasted to find out that an average company spends as much as $37 pushing one invoice through their paper system. How can that be? First, bear in mind an average company in this case is one that is not automated and is average in terms of productivity or how many invoices it can process a month. The cost of $37 comes from a recent AP study done in the US. So where is all that money being spent? Most of it is in the data entry.

One company I worked with briefly had the equivalent of one full time AP clerk that cost $42K annually and could only push through 250 invoices a month; that works out to be 38% of the cost right there. The rest is harder to "see" but think about what is required both in time and utilities when handling the invoice; opening and routing the mail, photocopying for back up, stamping, coding, approving, mailing, printing the cheque for payment, filing the invoices, storage costs, answering inquires on missing or unpaid invoices, data entry errors and the cost of duplicate payments, missed discounts etc. and it all adds up.

And what about companies that must re-bill costs to clients like property management or construction companies. There is a lengthy process of standing by the copier and having separate files etc. What is you could do it all with a click of a mouse and in a few seconds email if off?

Automation of your accounts payable system from invoice arrival through to electronic payments can reduce that $37 per invoice to as little as $4. Imagine if your company processes a few as 300 invoices a month that is over $100,000 in savings annually. So why isn't everyone doing it and doing it now?

Stayed tuned........