When it comes to invoice processing, implementing an AP automation solution will allow your company to work smarter, not harder.
If you haven’t already, now is the time to do an AP automation cost savings calculation.
Processing a SINGLE invoice manually can cost a company anywhere from $14 to $20 in hard and soft costs.
In this article we are going to do some AP calculations and break that cost savings of automation down. We’ll look at how AP automation solutions can save on the ‘hard labor cost’ of an Accounts Payable clerk’s time spent processing invoices. And then we’ll consider some of the softer cost savings that AP automation software can provide for your company.
Table of contents
- How AP Invoice Automation Reduces the Hard Cost of Invoice Processing
- Invoice Processing Hard Labor Cost Savings with A/P One: A Case Study
- A/P One Invoice Automation Delivers Multiple Time and Cost Savings
- Cost Saving are One Thing…Let’s Talk ROI AP Calculations
- Bottom Line – Saving Time and Money With AP/One Invoice Automation
How AP Invoice Automation Reduces the Hard Cost of Invoice Processing
Implementing an AP automation solution like A/P One can reduce the hard labor cost of invoice processing by 78% – resulting in immediate cost savings and ROI for your company.
Here is how it does that.
A/P One Saves Time
It’s a simple AP calculation: the industry average AP clerk can process 5 manual invoices per hour (12 minutes per invoice). This includes data entry, proofing the manual entry, correcting ‘fat-finger’ mistakes and processing the invoice.
But A/P One automation creates efficiency that allows your AP clerk to process 30 invoices per hour (2 minutes per invoice)!
A/P One saves time by improving your AP clerk processing rate from 5 invoices per hour to 30 invoices per hour.
How does AP/One create this significant invoice automation efficiency?
It’s called CoreInterator Verified Data Capture Service.
With AP automation you or your vendor can scan or email invoices directly into the A/P One Verified Data Capture Service. Within 1 business day, the invoice shows up in the clerk’s work queue with important data automatically entered in your system ready to be processed.
With CoreIntegrator Data Capture Service, we automate your AP invoice data capture through our rigorous automated AND human verification process. So you can rest assured that your data is nearly 100% accurate.
Any time there is a discrepancy, a question, or even a doubt about a piece of data, we flag that invoice data for your AP staff to review.
So your AP clerk simply confirms the data, selects the GL expense code and electronically sends the invoice to the internal invoice approver. The AP clerk can then track the entire approval process through as many approval levels as needed. After approval, the AP clerk does a final check of everything and then submits the payable transaction to the accounting system.
And now our Data Capture Service is available as a stand-alone product. You can get no-frills invoice data capture and image capture for about the price of a first class stamp per invoice! Click here for details!
AP Automation Saves Money Because Time is Money!
Industry averages say that an AP clerk’s all-in cost to a company (salary plus benefits) is about $27 per hour.
This means that at 5 invoices per hour the average hard cost of labor alone to manually process a single invoice is $2.25 per invoice.
A/P One invoice automation enables that clerk to process invoices SIX TIMES FASTER which translates to a hard labor cost of $0.50 – fifty cents per invoice using A/P One!
Quick AP calculation: your company could save $1.75 per invoice in hard labor costs alone – that’s a 78% savings!
What your company does with the time and money you save with A/P One invoice processing is up to you!
Read our article: How to Analyze Accounts Payable Data to Save Money
Invoice Processing Hard Labor Cost Savings with A/P One: A Case Study
Let’s do the AP calculation for a company manually processing 500 invoices per month.
Before A/P One AP Calculation
A company processing 500 invoices per month would likely have one full time AP clerk that spends an average of 5 hours a day processing invoices before he or she focuses on other tasks.
Again, that clerk’s cost to the company is about $27 per hour for processing 5 invoices per hour.
That person’s hard labor cost to the company works out to about $135 per day processing invoices.
After A/P One AP Calculation
Now let’s consider the same company after implementing A/P One invoice automation.
That same AP clerk can now process about 30 invoices per hour rather than 5.
So now the clerk only spends about 50 minutes per day processing invoices instead of 5 hours! The hard labor cost to process invoices falls from $135/day down to about $22/day.
The cost savings for the hard labor cost alone is about $113/day – or over $29K/year.
The time savings is 10 minutes per invoice or about 83 hours of extra time per year.
The person processing invoices now has over 2 extra business weeks of time a year available to work on other projects and tasks! Tasks like data analysis and vendor relations that can save your company money.
Remember, this AP calculation assumes 500 invoices per month. The more invoices your company processes, the more you will save!
But that’s just the start of how A/P One can save your company time and money.
A/P One Invoice Automation Delivers Multiple Time and Cost Savings
There are many other efficiencies gained by automating your accounts payable process. But they are more difficult to associate costs and calculate time saved. So let’s call these ‘soft cost savings’ – although they are very real.
The Soft Costs of Processing Invoices Manually
When a company receives a mix of paper invoices and PDF files via email an AP clerk must coordinate getting the paper to the approver or managing approvers via the company email system or even by sending paper invoices around the office. And most companies have several levels of invoice approval depending on the invoice amount.
But paper gets lost. Emails are hard to manage. The status of invoices ‘in process’ is hard to if not impossible to track.
The entire process of managing invoices and the approval process is very time consuming. And not just for the AP clerk but also for the managers who approve invoices.
A/P One Invoice Automation Creates Efficiency at All Levels of Invoice Processing
In addition to automating the entry of AP, A/P One invoice automation includes the ability to approve invoices electronically. Even while remote on a tablet or mobile phone.
So with A/P One in place AP clerks don’t have to waste time chasing after managers with paper invoices to initial or sign. And managers can approve invoices with a single click of a mouse or screen.
And A/P One allows everyone in the invoice approval chain to see all invoices that are either in process or completed.
Take a look at a quick overview of A/P One:
Other Soft Savings
With A/P One, your invoice processing and approval will be so efficient that your company can regularly take advantage of early payment discounts.
And with A/P One making invoice processing efficient you will never pay late payment penalties again.
Plus, your audits will be simplified, more efficient and cheaper because all invoices and documents are available electronically.
Cost Saving are One Thing…Let’s Talk ROI AP Calculations
Obviously, the A/P One invoice automation solution costs money to use – your company won’t realize the entire cost savings shown above.
The good news is that A/P One costs way less to use than the money saved. So companies of any size will see a positive Return on Investment (ROI) almost immediately.
Let’s go back to our AP calculation on a company processing 500 invoices a month. Let’s look at HARD LABOR COSTS ONLY.
The cost to use A/P One to process the daily average 25 invoices used in our AP calculation would be about $37.50. And the hard labor cost savings/day shown in the case study above is $113.00.
So that company’s ROI would be about $75.50 per day.
Your company gets all of that invoice automation efficiency from entry to approval to payment. So AP automation pays for itself. AND you get $75.50 ROI per day.
The annual ROI would be almost $20K!
Again, this AP calculation assumes 500 invoices/month. The savings and ROI increase as the number of invoices increases. So if your company processes thousands of invoices per month your savings and ROI will be multiplied.
Get Even Better ROI by Adding ePayments
You can improve on that AP ROI calculation by adding electronic payments to your AP automation.
CoreIntegrator’s OnPay Solution to automatically makes electronic payments by check, ACH or wire transfer. This saves somewhere between $2 and $4 for each manual check you currently cut. So the savings add up fast.
Or, even better, why not use virtual credit cards and receive a 1% rebate on every payment you make!? That’s right, suddenly your AP department will be ADDING to your organization’s bottom line every time they pay a bill!
Bottom Line – Saving Time and Money With AP/One Invoice Automation
Check out our detailed costs savings and ROI calculator that you use can use to run your own AP calculation. Or we would be happy to run a report specific for your organization.
The bottom line is that CoreIntegrator’s automated invoice processing and approval automation solution will save your company time and money no matter how big or small.