Since the early days of business, accounts payable has been a paper-heavy, manual process. In distribution, your accounting team spends time sorting through invoices received via email and snail mail, matching them to purchase orders, verifying the information, and sending payments.
This process involves walking around the office and digging through filing cabinets. Your accounting team also spends hours manually entering information from invoices into your AP software. When you add up all the time and labor resources involved, the cost of manual invoice processing becomes apparent. See how technology and automation can transform your accounting department.
Hidden Costs Associated With Manual AP
Using paper-heavy accounts payable processes requires time and resources. With manual AP processes, it takes you an average of 25 days to pay an invoice. Although this falls within the net 30 payment window, you’re cutting it close.
Any operational bottlenecks, such as approvals or lost paperwork, can cause you to miss the payment deadline and incur a late fee. If you’re still not sold on the benefits of AP automation, consider these hidden costs of manual processes:
- Labor: To process invoices manually, you need people to receive invoices, enter the data, research discrepancies, and issue payments.
- Human Errors: Manual AP processes are more prone to human errors, such as data entry mistakes, misfiled invoices, and duplicate payments. Your company spends time and money resolving these errors.
- Approval Delays: Physically preparing and routing invoices for approval delays the process. If an invoice is buried in your manager’s inbox or unread email, they can’t approve it, and you can’t pay the bill.
Average Costs of Manual Invoice Processing
Estimates of the average cost to process an invoice manually vary, but it can cost up to $32 per invoice. One in five invoices is flagged for an exception due to missing information, coding errors, incorrect PO information, and other issues. For each of these invoices, your company spends time investigating and correcting errors as they age.
As your accounts slip into overdue status, you end up paying late fees. Companies across the country pay nearly $40,000 in late fees each year.
Paying your invoices late ripples into your cash flow. You’re not only shelling out money on late fees, you’re also playing a constant game of catch-up. This makes it hard to predict your cash flow and allocate resources correctly. You also risk damaging supplier relationships if you’re consistently paying late.
AP Automation Savings For Your Business
Shifting from paper to digital workflows improves accounts payable efficiency. It shortens your payment cycles and reduces your AP workflow cost. On average, you can expect to pay between $1 and $5 to process an invoice using AP automation. Reducing bottlenecks and removing human error from the equation reduces invoice processing time and makes your team more efficient.
The benefits aren’t only financial. Digitizing and automating AP workflows gives you a traceable paper trail for each invoice. If you end up having to dispute charges, all your documentation is easily accessible. Automation also helps reduce fraud by strictly enforcing approvals and other controls. Your system will cross-reference invoices and flag duplicate payments or suspicious activity.
AP workflow automation solutions will scan incoming invoices and match them to the corresponding purchase orders. The system flags exceptions and routes them to your accounting team. You can process and pay invoices faster while maintaining good relationships with your suppliers.
How To Calculate Your Own Cost Per Invoice
Since the average cost to process an invoice manually varies by industry and business size, it’s best to calculate your own. This gives you a benchmark to compare savings over time as you implement automation.
First, add your total AP costs, including labor, technology, overhead, and any transaction fees. Next, determine how many invoices your AP department processes in a month. Divide the total cost by the number of invoices. For example, if your total AP costs per month are $4,900 and your team processes 500 invoices per month, your cost per invoice is $9.80 ($4,900/500 = $9.80).
Invest in AP Automation Before the 2026 Budget Cycle
With budget cycles locking down soon, it’s the best time to consider adding AP automation to your business. Although it seems like a big up-front investment, AP automation savings add up over time. Lower your invoice processing time and cut your error rate with WorldView’s solutions.
We can help you automate 90% of your AP processes to keep your accounts current. Stop paying excessive late fees and sending your AP team all over the office to chase paper. Your team can focus on high-level tasks such as vendor relationship management or analyzing spending trends.
Schedule a demo today to make your case before the 2026 budget is finalized.
