How to Save Your Company Time and Money on Invoices

You know about all the major costs of purchasing, but it’s the little costs that can add up to really eat away at your bottom line. Incremental, high-volume costs (such as invoice processing) may seem unchangeable; however, new technologies are changing the way this basic process is handled. Not only can these new ways of doing business save you money, but they can also give you more time to focus on other projects that bring real value to your company.

The Trouble With Manual Invoice Processing

Some 90 percent of invoices generated today are still processed manually. Along with manual processing comes human error and delays, an unavoidable part of the paperwork. And even after the invoice is generated, there’s still the matter of entering the same information into the ERP software after the payment is approved. Every minute spent on slow manual entry is a minute that can’t be spent elsewhere.

Dollars and Cents of Invoice Processing

So what does manual invoice processing actually cost? Estimates vary widely: some say it averages $12-$15 per invoice, others peg it as high as $30-$40. The price is driven largely by the underlying costs and (in)efficiencies. Automating the process can bring you in on the lower side, having an unnecessarily complex manual system tends to drive you higher.

Kinds of Expenses

There are several categories of expenses that comprise the total cost of invoicing:

  • Direct Expenses. These costs are easy to spot. Paper, postage, and printing fall under this category. This also includes the cost of shipping or storing paper invoices (if you have off-site facilities).
  • Indirect Expenses. This includes the human costs of invoicing since the staff is paid to do the grunt work and follow-up tasks.
  • Hidden Expenses. These costs may not be as obvious. You can think of errors or delays as expenses because they cost you time that would be better spent elsewhere. Not to mention late fees or lost cash when an invoice is not paid promptly.

Invoicing Cost Calculator

Your individual invoicing costs will vary. Here are the factors that go into figuring those costs::

  • How long did staff spend processing and reviewing invoices?
  • How long did the staff spend finding and fixing errors?
  • What did it cost to ship and store paper invoices?
  • What penalties or late fees were assessed?
  • What did the physical materials and postage cost?

Divide these costs by the total number of invoices to figure out your cost-per-invoice.

The Automation Alternative

According to the American Productivity and Quality Center, the top 25 percent of businesses spend only $2 per invoice. By contrast, the bottom 25 percent spend more than $10 per invoice. The big difference between them was in whether they automated their invoice processing.

Using purchasing software to automate your accounts payable processes:

  • Takes the paper out of the equation entirely.
  • Keeps labor costs low.
  • Reduces errors and fraud.
  • Gets approvals faster.
  • Frees up time for your staff to do higher-level tasks.

The end result is much less expensive, much more reliable invoice processing.


If you don’t know what you’re paying per invoice, now is the time to find out. Armed with that information, you can take steps (such as streamlining or automating) to reduce costs and make life easier for yourself, your staff and your whole company.

David Millington

David Millington M.Sc.QSM, NPDP, CL6σBB, SPP, SPSM3®, CM® Director of Education (Next Level Purchasing Association) A Certified Strategic Planning Professional, David Millington brings over 18+ years experience in the Strategy Execution, Product / Service Development, Organizational and Supply Chain Excellence Arenas. He is a Certified Supply Chain Professional, Certified New Product Development Professional, Certified Strategic Planning Professional, and a Certified Lean Six Sigma Black Belt. David holds a master’s degree in Quality Systems Management, from The National Graduate School of Quality Management, Falmouth MA, USA. This equips him with mastery of vast bodies of knowledge and best practices. David Millington brings hands-on experience at VP, Director, and Manager Levels, guiding and facilitating the development of strategic and tactical solutions to intricate organizational, product, and service challenges.

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