The Myth of the $22 Invoice: An Introduction
You may have heard this before: it costs about $22 to process one manual invoice. Many finance reports and AP studies have used this number. But the truth is that number doesn't even come close to the whole picture.
The true cost of doing invoices by hand is more than just paper, postage, or staff time. It affects your productivity, cash flow, and even the way you work with your vendors. And for businesses that are growing, those hidden leaks can cost them thousands, and sometimes millions, of dollars each year.
1. Time Delays: The Hidden Cost of Waiting
It's slow to send bills by hand. Every step, from getting paper bills to sending them for approval, slows down your process.
It can take 5 to 10 days for a normal approval cycle, which can delay payments and cause people to miss early-payment discounts. When you add up hundreds or thousands of invoices, you can see how much money it costs.
But the bigger loss is in operations: your team is wasting time chasing signatures and reconciling data instead of doing analysis, forecasting, or strategic planning.
2. Human Error: Small Mistakes Can Have Big Effects
It's easy to make mistakes when you enter data by hand. A single wrong decimal point or duplicate entry can cause problems with payments, overcharging, or following the rules.
Research shows that about 3–5% of invoices that are processed by hand have some kind of mistake. It takes more time to look into and fix each one, which costs you money and trust with your vendors.
Errors can make financial reports look wrong, which can lead to bad decisions by management.
3. Not getting discounts and having cash flow problems
A lot of suppliers give discounts for paying early, usually 2% off if you pay within 10 days. But when invoices are left in inboxes or on desks, those chances go away.
Late payments also make it harder to predict your company's cash flow. Finance teams have a hard time planning budgets or making the most of working capital when they can't see payables in real time.
Automation lets you choose when to pay, which lets you get the most out of both discounts and cash flow stability.
4. Labor and Overhead: Getting Less for More
People often forget about the human cost. You need more staff, more training, and more oversight to process invoices by hand.
Consider how much time you spend matching purchase orders, checking vendor information, and putting away papers. Each task may seem small, but when you add them all up, they make a lot of work for the administration, which grows with volume, not value.
Automated invoice processing lets your team do the same amount of work with fewer resources, which lets them focus on more important financial tasks.
5. The cost of following the rules and losing data
It's hard to keep audit trails with manual systems. You can lose paper invoices, but digital copies can be stored in different inboxes or drives.
You have to spend extra time looking for records when audits happen or when a vendor questions a payment. That time is also money.
An automated invoice system, on the other hand, makes sure that every step is recorded and can be found again. This lowers the risk of noncompliance and makes things more clear.
Conclusion: Counting What Really Matters
The $22 per invoice is only the beginning. Inefficiency, inaccuracy, and missed chances are what really cost you money.
Not only are you saving money on operations by automating your invoice process, but you're also making your finance department more flexible and data-driven. One that looks past the numbers and focuses on what really matters: growth, control, and clarity.
FAQS
What makes processing invoices by hand so expensive?
Because it has a lot of steps that people have to do, like entering data, getting approvals, and fixing mistakes. Every step in the process takes more time and costs more money, which adds up quickly.
How does automation lower the cost of processing invoices?
Automation gets rid of tasks that need to be done over and over again, cuts down on mistakes made by people, and speeds up the process of getting things approved. It also makes things more visible, which lets you take advantage of sales and keep better track of your cash flow.
Is invoice automation only for big businesses?
Not at all. Small and medium-sized businesses get a lot out of it, and they often see a return on their investment within a few months. The most important thing is to pick a system that can grow with your business.
About Splace BPO
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