What is the Average Cost to Process an Invoice?

By NE Docs | July 3, 2014

What is the Average Cost to Process an Invoice

What does it cost to process an invoice? If your organization has a best-in-class AP invoicing process – then the answer is around $3.34. However, for the average organization, the cost to process an invoice is about $7.00.

While the cost of invoice processing varies from company to company, there is one undeniable truth: Paper invoices and manual processing impedes on the efficiency of your accounts payable operations. Finance departments are often left in the dark, lacking the automation and visibility required to properly manage cash positions.

In a 2012 study by the Aberdeen Group, 130 enterprises were profiled to help differentiate the best-in-class AP processes from their competitors. According to the Aberdeen Group, there are 4 primary outcomes that AP automation should provide:

  • Increased savings through discount capture
  • Decreased risk of penalties
  • Decreased labor costs
  • Improved access speed

The Aberdeen Group chose 3 primary performance criteria in order to classify the three levels of accounts payable efficiency.

3 Accounts Payable Key Performance Indicators (KPIs):

  • How many days does it take to process a single invoice?
  • What is the average cost to process a single invoice?
  • What is the capture rate for early payment discounts?

With these accounts payable KPIs, the Aberdeen Group was able to identify 3 major stages of AP maturity:

Best-in-Class (Top 20%):

  • 4.1 days to process an invoice
  • $3.34 average cost to process an invoice
  • 90% early payment discount capture rate

Average (Middle 50%):

  • 6.1 days to process an invoice
  • $6.29 average cost to process an invoice
  • 47% early payment discount capture rate

Laggard (Bottom 30%):

  • 16.3 days to process an invoice
  • $16.67 average cost to process an invoice
  • 18% early payment discount capture rate

When compared to Aberdeen’s 2011 report – we can see that accounts payable operations have improved quite a bit –

Aberdeen Invoice Averages

However – there is still a disparity when comparing the top 20% to the rest. As more and more organizations realize the cost savings and process improvements that come with accounts payable automation, we will continue to see these statistics shrink.

In short – there is no exact cost of processing an invoice. However, there are several performance indicators that you can use to gauge the efficiency of your own AP processes.

How does your organization stack against the top 20%?

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