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What is the True Cost of Manual Invoicing for Your Business?
Many retail and restaurant operators just like you overlook the cost of day-to-day operations like manual invoice processing and payments. Here’s how to calculate the true cost.
It is 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. Invoice processing 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.
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 expense, you need to find out:
How much time manual invoicing takes, and
How much money manual invoice processing costs 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.
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 100% commitment, your team will lose productivity trying to juggle various unrelated roles –leaving you with lower performance, staff discontent, and worse results.
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 time, resources and money on 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 for your company to decide if it is 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.
|Advantages of electronic invoicing||Disadvantages of manual invoicing|
How to calculate the cost of 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 how much your company is spending to process invoices, 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 find is likely to be higher than you imagined, but you should also get excited, because now you see where you can make improvements. This is an opportunity for you to increase the 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. Improve performance, reduce costs, and benefit from electronic invoicing and discrepancy processing.