The Hidden Costs Associated with AP Automation
The invoice-to-payment process seems simple, but there are a lot of hidden costs associated with AP that quickly add up. Let’s look at the complete AP process: receive an invoice, find the appropriate purchaser for invoice approval, enter invoice data into the accounting system, request payment approval, execute payment, print checks, and mail.
Processing an invoice is more than just a piece of paper or a stamp. Costs break down into two categories: processing an invoice and processing the payment. Within these two categories, the cost of human capital is included as it is necessary to factor in time spent on these AP processes. Typically, an invoice costs between $10 and $15 to process, and a payment costs between $2 and $10. In total, the cost of processing and paying one invoice ranges between $12 and $25. When asked, many finance pros vastly under-estimate these costs.
Visualizing Hidden Costs Associated with AP
We created an ‘AP Automation Iceberg’ to visualize the hidden costs associated with AP automation and vendor payments. At sea level it seems your finance team is running efficiently, but there is room for improvement. Finance teams try their best to avoid duplicate payments. Unfortunately, they do happen. AP Automation ensures duplicate payments are avoided due to advanced control measures. Additionally, an automated solution simplifies the credit card process enabling finance teams to easily pay vendors by credit card and earn rebates and rewards. And, if your business does not have a corporate credit card, solutions can offer virtual card options. Lastly, with the ability to schedule payments in advance and see deadlines in a streamlined fashion, your business will never issue a late payment fee again.