The ROI of Automated Invoice Processing: What Can Your Company Save?

The Hidden Costs of Manual Invoice Processing

If manual processing of invoices is done in your company, the actual amount may not even be known to you. This is what it costs to manually process:

Labor Costs: Employees spend hours keying in invoice data, checking information, and following approvals.

Errors and Corrections: Human mistakes made during manual entry lead to overpayments, double payments, or late payment dates.

Late Payment Penalties: Delayed bills lead to penalties or strained relations with the vendors.

Paper and Storage Costs: Paper invoices cost money to print, store, and maintain files.

Audit and Compliance Risks: Manual processing prevents tracing and auditing payments, resulting in potential compliance issues.

Lost Invoices: Invoices on paper can get lost, which leads to inefficiency and delays in operations.

All these factors make manual processing expensive and inefficient.

How Automated Invoice Processing Saves Money?

Moving to Automated Invoice Processing saves a lot of money. Let us look at the savings in key areas:

1. Lower Labor Costs

Automating invoices does away with the requirement for employees to enter data manually. Intelligent Document Processing (IDP) rather reads information from invoices and enters it into the system. This reduces data entry and enables employees to concentrate on more productive activities.

Potential Savings: Businesses save 80% of labor expenses by automating invoice processing.

In addition, automation avoids fatigue among workers by reducing the drudgery of repetitive, low-add-value tasks so that personnel can focus on higher-value strategic finance work.

2. Less Error, Less Money Wasted

Human beings are more likely to commit mistakes, especially when they handle huge amounts of data. A single minute typo on an invoice will result in costly errors. Automated processing of invoices has fewer opportunities for overpayments and duplicate payments.

Potential Savings: Companies employing automated systems see a 90% reduction in errors on invoices.

Less error means fewer disputes with vendors, less back-and-forth communication, and better business efficiency.

3. Fast Rollout of Approval for Invoices

Invoices find themselves getting stuck in their approval cycles, which end up delaying payments. Automation ensures that those invoices get delivered into the right hands in real time without delays.

Potential Savings: Processing time is reduced from weeks to hours.

4. Avoiding Late Fees and Early Payment Discounts

Late payments mean extra charges. On the other hand, many vendors offer early payment discounts. Automated invoice processing helps firms pay on time and reap early payment advantages.

Potential Savings: Firms save 2-5% per invoice by capturing early payment discounts.

Such savings are extremely beneficial for large companies processing thousands of invoices monthly.

5. Lower Storage and Paper Costs

Paper storage of invoices takes up space and is costly to print. Automation eliminates paper storage and converts all this to electronic records.

Potential Savings: Document storage or paper costs could potentially save up to 75 percent for companies. Digitization also contributes to less environmental pollution, hence, more environmentally-friendly companies.

6. More Advanced Fraud Prevention

Automatic processing is just too easy for them to fall between the cracks and let fraudulent invoices through. Automated systems use AI ideas to guess the chances of fraud detection and identify duplicates or actual invoices.

Potential Savings: Businesses can recover lost revenue from fraud, conservatively estimated at billions annually globally.

The Big Picture: Calculating ROI

Alright, so how does that all add up to real savings? Assuming:

• Your business processes 10,000 invoices a year.
• The cost per invoice for manual is $15 (including labor, errors, warehousing, and delays).
• Automated processing reduces the cost to $3 per invoice.

Annual Savings:

• Cost of Manual Processing: 10,000 x 15 = $150,000
• Cost of Automated Processing: 10,000 x $3 = $30,000
• Total Savings: $120,000 per year!

Now, suppose that your business handles 50,000 invoices annually. The savings would be $600,000 per year!

Furthermore, automation eliminates the necessity of hiring additional finance personnel as your business expands, thus generating long-term cost savings.

Beyond Cost Savings: Other Benefits of Automation

While cost savings are important, automation has other benefits:

Improved Compliance

Computerized systems ensure bills are compliant with tax and regulatory requirements, reducing compliance risk. It is simple for auditors to obtain electronic records, simplifying financial reporting.

Better Supplier Relationships

Speed of payments improves relations with suppliers, leading to better terms and potential savings.

Scalability

When your business grows, automation functions handle larger volumes of invoices without the recruitment of extra employees.

Real-Time Financial Insights

Automation provides accounting teams with real-time visibility into cash position and open payment, which allows better planning.

Enhanced Security

Cloud-automated invoicing systems provide secure storage of data, where the risk of loss of and misusing the data is kept to an all-time low.

Is Your Company Ready for Automated Invoice Processing?

If you are still at manual methods, it is time to switch. The time and cost savings provide a good business case for Automated Invoice Processing. Intelligent Document Processing can process invoices more quickly, accurately and at a reduced price backwards.

Want to estimate your possible savings? Use an ROI calculator or talk to a provider today.

Final Thoughts

Automation of invoicing is not solely about cost-cutting. It's optimizing your business for growth, scalability, and profitability. With the right system in place, your business will save you thousands—if not millions—of dollars annually.

What you invest in automation today will place you in the driver's seat in relation to your competition and result in less heart-wrenching financial processing.