Is your retail business one of the many that still processes and pays vendor invoices manually?
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 like invoice processing and payments.
While it will take a little effort on your company’s part to switch away from manual invoicing, the benefits of electronic invoicing are far more impactful than the drawback of change management.
Continue reading to find out what the true cost of a manual invoice is for your business. Learn More about how you can operate more efficiently and save your company money.
True Cost of Manual Invoice Processing: Facts You Must Know
Turning a blind eye to how much time and money manual invoice processing costs your company may help you avoid the pain of knowing how bad things really are. What turning a blind eye won’t do, however, is deliver a solution to the problem.
Companies with complex accounts payable processes may find themselves shelling out as much as $40-$50 to process each invoice. Even simple manual processes cost in the range of $6-8 per invoice.
Calculate how many invoices you process manually each month, and you’ll feel the burn in your company’s wallet.
Here are some of the key drawbacks of manual invoicing on top of how much money it costs your company.
1. Time Consuming
Your team spends massive amounts of time on manual invoice processing to achieve results that are less desirable than the results you would get from an efficient electronic invoice processing system. The time consumption plays right into the higher costs problem since you’ll be paying more people to work longer hours even as you make more mistakes. Your cost of operations will continue to rise as you open new sites, add new vendors, and process more invoices.
2. Error Prone
The degree of human error that takes place with manual invoice processing is far greater than most operators assume, routinely in the range of 2-3%. This factor alone should push any reticent retail business toward electronic processing. Problems including late payment penalties, missed discounts, duplicate payments, overpayments, and overlooking or forgetting credits due are common. These issues cause a major impact to your bottom line.
3. Productivity Killer
When your team isn’t able to focus time and attention or selling more products and making your customers happier, and are instead focusing on mundane tasks and arguing with vendors, you are more likely to deal with lower performance, staff discontent and worse results.
Assessing Your Own Situation
Most retailers acknowledge that the above problems with manual invoice processing are more than true. Instead of guessing how much it costs your company to process its 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 is never caught or corrected!)
- Mail or bank costs for each invoice
- Labor hours (fully loaded)
- Lost discounts or late fees
Once you’ve gathered your numbers, use this formula:
Late fees + personnel costs + postage costs + lost discounts + human errors + data storage costs / the # of processed invoices = cost of processing per invoice.
Figure these factors, use the formula and you will see your average cost of manually processing your invoices. The number you find is likely to be higher than you imagined, but you should also get excited. Now you see where you can make improvements. This is an opportunity to increase the bottom line from one change in your processes.
There are so many disadvantages to manually processing invoices that it shouldn’t even be a question as to whether or not you go electronic. The question should be, who do you partner with to go forward.
Step Into the Electronic Age
Now you know how ineffective manual processing is and you know that paper invoice processing costs you money. The best thing you can do for your business is change over to electronic invoice processing.
Workflow automation will improve your processes and make your company more effective overall. Change doesn’t have to be as scary as it sounds. When you work with a professional company to make the change, you can rest assured that the process will be almost painless.
Electronic invoice and discrepancy processing is the solution your company needs to reduce costs, become more efficient, reduce the loss of productivity hours and allow your focus to go to what is important.electronic invoice and discrepancy processing allows your company to automate your invoicing process which means you get the following benefits.
- Reduced costs
- Increased accuracy
- Increased AP productivity
- Improved supplier relationships
- Improved dispute handling
- Ability to focus on higher value activities
- Faster processing and payment cycles
- Reduced fraud
- Reduced duplicate payments
When you begin using your new electronic invoice and discrepancy processing solution, you will see how quickly AP no longer looks like a nightmare. Get excited about this process and get it started today so you can start seeing these benefits.
Running a retail business can be stressful when trying to grow your company’s revenue, manage relationships, increase profits, reduce costs and satisfy consumers. Let's talk about how electronic invoice and discrepancy processing is a great way to improve performance and reduce costs.