Processing accounts payable invoices can be expensive for your business. But can you save money with an accounts payable outsourcing partner? A survey conducted by the International Accounts Payable Professionals (IAPP) found that it costs – on average – $8 to process an invoice manually; other firms report processing costs are as high as $10-$20 for a single paper, fax or email invoice!
Do You Know How Much it Costs to Process Your Invoices?
Many organizations often don’t know how much it costs them to process each individual invoice, but ‘cost per invoice’ is an important metric to understand – and it isn’t difficult to calculate.
If you have a dedicated Accounts Payable department, simply divide the cost of running the department by the number of invoices processed. For example, if it costs $10,000 to run your AP department each week and they process 1,000 invoices – each invoice costs your organization $10. (There are many ways to calculate your company’s cost per invoice. This survey does a great job of covering some of the most popular.)
What is the Accounts Payable Outsourcing Savings?
The hunt for lower AP costs has led many businesses to Accounts Payable outsourcing. It’s a great way to improve performance, streamline operations and reduce costs. How much cost savings can companies realize? Switching to an automated, electronic invoice outsourced provider can generally reduce the cost per invoice to well under $3.
What Does it Take to Outsource AP?
To achieve the greatest value from outsourcing AP, the entire process should be fast and require minimal implementation to keep internal costs, set-up and training at a minimum.
Even with outsourcing, it’s important that the organization keep an accounting team for invoice decisions that can require an accountant’s review. The vast majority of invoices, however, can be easily automated – meaning your staff won’t need to review items that don’t need human expertise.
Accounts payable outsourcing offers many benefits to businesses including:
Reduction in labor costs – companies report up to an 80% reduction in labor and its associated costs
Lower per invoice costs – well under $3 per invoice
Fast, seamless implementation into your existing enterprise systems
Custom configuration for your business – systems can be cloud-based, installed locally at your location, or a combination of the two
Improved accuracy – businesses have reported paying up to $50-55 to handle each invoice error. A strong outsourcing partner uses sophisticated error identification and correction systems to reduce errors and costs.
Complete audit trails and instant record and reporting systems
Routing of invoice deviations via smartphones or web browsers
An automated, accounts payable outsourced solution can be a tremendous boost to productivity, accuracy and your company’s bottom line. It’s critical to choose a partner with the expertise to craft the solution that works best for your business. And understanding your true cost per invoice is an important step towards improving your company’s efficiency.
Do you know how much AP processing costs your business each month?