For organizations, controlling supplier costs is critical for financial stability. No matter whether it is a manufacturing company that wants to reduce the cost of production or a service organization that wants to get the best deals for office supplies and travel, effective invoice management is a must for any corporate department.
One area that costs businesses more is invoice management and processing. Although the volume of invoices received is dependent on the business type, the cost of processing invoices manually is highly increasing. In companies with a completely manual process, getting an invoice approved and processed can cost around $17 each. Apparently, organizations that receive just 50 invoices a day will spend over $150,000 per year just to process supplier invoices.
The first immediate question that comes to mind is why is this process so expensive? Invoice processing can be time-consuming and labor intensive. First, invoices need to be received, followed by system entry, assigned appropriate coding, submitted for approval, and entered into the ERP system for approval. Certain delays can be experienced in every phase.
Lack of visibility into the entire process can result in potential issues such as invoices may be lost or left over before they reach Accounts Payable (AP) and the delays can result in issuing duplicate invoices and bypassing approval processes. The entire process is associated with several other costs such as suppliers could impose late payment fees, paying for duplicate invoices, and early payment discounts could be missed. These are some of the issues manual invoice processing presents. Other major problems such as non-compliance with budget and approvals, fraud and excessive budget allocation could result in major problems in the accounting process.
Automating the process with invoice software is the only answer to overcoming the challenges associated with manual processes. Automation allows AP departments to streamline the entire process – from invoice capture to approval. In addition, automation gives complete visibility into the process and eliminates the issues associated with non-compliance by automatically enforcing business rules.
The most important factor – cost savings, can be achieved through reduced need for manual intervention. Automation cuts the cost of invoice processing by 75%. From early payment discounts to cost savings, you can get more accurate and timely spend data analysis when you switch to an automated invoice management software.