Guest Blogger: How Much are your Invoices Actually Costing You?
Anyone involved in accounting or billing processes knows what a pain your invoicing processes can be. They’re tedious, time consuming and often frustrating. Beyond this they can actually be costing you some major money if your processes are ineffective or disjunct from other areas within an organization or business.
The truth is that even with a comprehensive ERP system in place, most companies have no choice but to manually process non-electronic (paper) invoices. Processes to handle these invoices are manually intensive, time consuming, error prone, and costly. How costly you ask? I did some digging to see what the top studies had found a huge range of estimated costs from $5 to $26 per invoice with an average around $15.50/invoice.
The crazy thing is that’s just the cost to process not counting all the external parts of your invoicing! Given these stats, there’s got to be a better way. There’s obvious a real need to automate processes or outsource them all together. Don’t believe me? Check out these stats come from IOFM, The Hackett Group and The Aberdeen Group, they speak for themselves. Reducing your invoicing costs In 2010, the average company with a low level of automation spent almost 250% more to process an invoice vs. an average company with a high level of automation – $15.70 vs. $6.31 ($9.39 savings per invoice!).
Further comparison showed the cost to process an invoice for the best automated performers was $0.74 – 21 times less than the average low automation company. (IOMA’s AP Department Benchmarks and Analysis 2010 report). Best Performers outperformed others by 400% – 1700%: Top Performers are 4 Times More Productive than Non-Top Performers (Number of invoices a full time employee can process per year Source: The Hackett Group, 2009). Benchmarking research on accounting strategies across nearly 400 organizations revealed the benefits that Best-in-Class organizations achieve by developing efficient processes:
|Performance Area||Best in Class Advantage|
|Invoice processing costs||91% Lower|
|Processing cycle time||46% Shorter|
|Late payments||12% Fewer|
|Staff time responding to inquiries||30% Less|
Conclusion Stats like these open your eyes to the real cost of your invoice processing, but as the studies show, technology to streamline them can dramatically reduce your costs so when you get paid, it doesn’t cost you an arm and a leg.
POSTED BY: Gerad Hoyt, Specialist with docSTAR, a provider based in Schenectady, NY