As a supplier, you could be wasting time with manual processes. Here are 5 important signs it's time to switch to an automated invoice system.
What is the True Cost of Manual Invoicing for Your Business?
Many retailers overlook manual operations that make the cost of processing invoices and payments high. Learn how to calculate and reduce these costs.
It’s easy to get stuck doing what you’ve always done. Many retail or restaurant operators just like you overlook the cost of day-to-day operations. The costs of processing invoices and payments are no exception.
Switching from manual invoicing will take time and effort. However, the benefits of electronic invoicing are far more impactful than the drawback of change management.
Disadvantages of Manual Invoicing
There are many disadvantages when it comes to manual invoicing. Here’s an in-depth look at just four:
Companies with complex accounts payable find themselves shelling out as much as $40-$50 to process each invoice. Even simple manual processes cost anywhere from $6-8 per invoice. And these numbers only add up.
In order to understand your company’s expenses and reduce the cost of processing an invoice, you need to first know the answers to the following questions:
- How much time does manual invoicing take?
- How much does it cost to process a manual invoice for your company?
We’ve all been there –you spend hours working on one task, only to realize at the end you missed something and have to start again. Manual invoicing is time-consuming and inefficient. And you could gain the same results in less time with an electronic invoice processing system.
To manually process invoices, you have to pay more people to work longer hours. And, you aren’t guaranteed perfection; humans make mistakes. Not to mention, cost of operations will continue to rise as you open new sites, add vendors, and process more invoices.
Two to three percent. That’s the range of human error involved with manual invoicing. Much higher than you’d like, right? This factor alone should push any reticent retail business toward electronic processing to reduce manual invoice processing errors.
You could also run into additional issues that could impact your bottom line, such as:
- Late payment penalties
- Missed discounts
- Duplicate payments
- Overpayments, and
- Overlooking or forgetting credit due dates
Time spent on manual invoicing is time where your team isn’t selling products or helping customers. They’re forced to split time between mundane tasks, arguing with vendors, and trying to provide top-notch customer service.
Without a 100% commitment to reducing manual invoice processing, your team will lose productivity trying to juggle various unrelated roles –leaving you with lower performance, staff discontent, and worse results.
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Advantages to Electronic Invoicing
The best thing you can do for your business is to change over to electronic invoice processing. Take these four benefits, for example:
Save the time, resources and costs of processing invoicing and payments with manual labor. With electronic invoicing, your team can spend more time upselling and increasing your revenue, and less time creating, filing, correcting and paying invoices.
Electronic invoicing and workflow automation can make your process painless and more efficient. Easily create, submit and pay invoices, hassle-free. No waiting. No wondering.
Electronic invoicing systems reduce the risk of human error and fraud so you can stop worrying about mistakes, and spend your time where it matters most.
Everyone wins –processes and payment cycles are quicker and easier. And all invoices are paid on time. Suppliers are happy, and in-store customers receive more time from your team.
Knowing all the Facts
You’ll have to do an analysis of your company to decide if it’s worth your time and money to switch to electronic invoicing. Take a look at the advantages and disadvantages, side-by-side, as you make your decision.
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How to calculate the cost of processing manual invoicing
Now that you know the disadvantages of manual invoicing and the advantages of switching to an electronic system, it’s time to get a concrete number so you can get an idea of the true cost.
Instead of guessing the true cost of processing an invoice at your compan, use these factors to calculate the cost:
- Invoice processing and data entry
- Hours spent to find and correct any data errors (and the percentage of errors that are never caught or corrected)
- Mail or bank costs for each invoice
- Labor hours (fully loaded)
- Lost discounts or late fees
This will give you the average cost to manually process your invoices. The number you’ll calculate is likely to be higher than you expected, but you can simply see where you can make improvements. This is an opportunity for you to reduce manual invoice processing costs and increase your bottom line from one change in your processes. But how?
An electronic invoicing solution
Running a retail business can be stressful –you’re trying to grow your company’s revenue, manage relationships, increase profits, reduce costs, and satisfy consumers.
Consider an electronic invoicing solution —one that improves accounts payable performance, reduces manual invoicing process costs, and gives your team the time to focus on the high-level, strategic work that’s essential to your organization’s bottom line. Want to learn more? Request a demo of iControl today.