Often you hear about large potential savings within your organization’s AP/AR processes. We also know that individual processes, invoice quantities, resources, and numerous other variables can contribute to determining the true savings of improving on outdated invoice processes across different businesses and industries.
In the world of Accounts Payable there are several ways an organization can save on invoice processing costs. Some of these variables include; an organization’s average cost of invoice processing, the salaries your organization is paying to your accounts payable team, the other teams involved in the approval process, the hard costs associated with paper checks, the time spent signing and approving payments, and the administrative overhead associated with mailing. That being said, understanding the subjective nature of these variables is just as important.
If you are having a difficult time determining an industry standard of invoice processing costs and how your organization compares, stop stressing. This is due to the wide array of the aforementioned subjective variables that contribute to your “all-in” price. Let’s discuss some of these variables individually to better understand why focusing on improving YOUR internal processes instead of how you compare the rest of your competitors or industry leaders is a more productive use of resources.
Average Cost Of An Invoice:
An average cost of an invoice is something that changes from organization to organization because there are no set rules for what determines this cost. For example, error rates, disputes and adjustments, administrative overhead associated with mailing, approval procedures, and more.
Salaries Of Your Accounts Payable Teams:
As we all know, there are no set in stone salaries for any position, nor are there any formulas that determine how much team salaries are playing a role in your “total” cost of your invoicing processes.
Other Teams And Times Integrated Into The Approval Process:
We know that there are always multiple parties involved with manual invoice processing but we do not always know how they integrate with one another or how much time each party spends communicating, processing, or approving an invoice.
Hard Costs Associated With Paper Checks:
Everyone’s hard costs with checks are different. Some of the determining factors include, how many you are processing and sending each month, the time spent reviewing check data components, employee time manually licking and stamping, etc. This is another area of contribution to “total” processing costs that contains a lot of subjective variables.
Time Spent Signing & Approving Payments:
Obviously there is no time limit other than as fast as possible with regards to signing and approving invoice payments which makes integrating it into your “total” processing costs impossible. 1 week there might be 50 invoices that run smoothly end to end and another week there might be 200 that are a nightmare proving again the subjective nature of trying to calculate a repeatable “total” time cost.
As you have read, nothing in present day current manual process of determining an organization’s total cost of processing an invoice is anything short of a guessing game. My point with all of this is simple, instead of trying to determine an industry standard and spending time identifying variables, reevaluate. Forget how you fit into the competitive landscape with regards to this “cost” and focus on optimizing how to make YOUR process as streamlined and efficient as you can.
If you can say that your current invoicing processes are running with efficiency and productivity, why worry yourself with trying to determine variables you cannot control?
One way that NetChain Squared can help determine if your processes are functioning as well as they can is to show how our technology eliminates most of your manual, subjective variables and replaces them with automated and controlled functionalities and timelines.
Please fill out the information below if you are interested in learning how NetChain Squared technology can help create a more efficient, cost effective AP/AR solution for your business or organization.