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How Much Is That Invoice in the Window?

What does it cost you to process an invoice? How does $13 sound?

According to Ardent Partners, that’s the average cost to process an invoice according to 245 business professionals in AP and finance who completed a survey or participated in an interview on AP operations and performance results. The data is published in its recently published report, “ePayables 2013: AP’s New Dawn.”

The research also broke down invoice processing costs by percent of electronic invoices received. Here are the findings:

% of Electronic Invoices Received             Average cost per invoice

<10%                                                                     $18.07

10-30%                                                                 $10.55

30-60%                                                                 $8.30

>60%                                                                     $6.08

 

Wait… there’s more:

“Best-in-Class” – $2.20 per invoice

“All Others” – $19.10 per invoice

You may contest the figures, but the magnitude of the difference between leaders and laggards holds up across many industry studies and reports.

I would argue that these cost figures are too low, especially for the laggards. The data likely ignore many relevant cost factors often not captured in this analysis. Here are a few to consider:

-          Proportion of invoices that contain errors and exceptions

-          Likelihood that the invoice is for a purchase off contract, at a higher price

-          Purchase off a catalog, but with outdated pricing

-          Long cycle time prevents capture of early payment discounts

Lack of attention to these details will not accurately calculate the real costs of a broken process. That’s why evaluating an invoice automation initiative in isolation, without paying attention to related processes involving contracts, catalogs and purchase orders, is the road to mediocrity at best, or laggard at worse.

Can you afford that?

About the author
Chris Rauen
Chris Rauen

Chris is responsible for marketing programs at Ariba that educate finance, procurement, supply chain, and other business professionals on the transformational potential of the Ariba Network and Ariba Financial solutions. Before joining Ariba, Chri... Read More >>>

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