Manual invoice processing
We all want our businesses to be more efficient. Every organisation has its struggles; whether it is a lack of resource, budgetary constraints, or trying to keep up-to-date with the latest technology. Each of these areas will impact an organisation’s efficiency, productivity and ultimately their bottom line.
One such department where our clients face their biggest challenge is the Accounts Payable (AP) function. Incremental costs, like those associated with invoice processing, are often seen as an unavoidable part of doing business. The heavily paper-based workflows and labour-intensive tasks that come as part of the creation, approval and payment of invoices can result in lost value and drive up costs. Employees can easily become trapped in a cycle of tedious manual invoice processing and become resistant to adopting new forms of working. Meanwhile, business owners can become stuck paying for costly and inefficient practices.
The cost of Manual Invoice Processing
If you are still using manual invoice processing you are not alone; according to a recent study it was estimated that 90% of all invoices worldwide are still processed manually.
Every organisation has a slightly different procedure therefore, companies can struggle to pinpoint the exact amount that they are spending. What’s more the number of hands an invoice will go through before being approved can differ depending on size and industry type. According to research firm Gartner, the average cost of processing an individual invoice in the UK is between £4-£25, with some costing it as high as £50 per invoice.
By understanding the gaps, risk and lost value within your own invoice process you can begin to put measures and technology in place to make it more efficient.
Why is manual invoice processing so expensive?
The staff costs incurred in manual invoice processing are obvious. However, other more auxiliary expenses soon add up to large sums over the weeks and months. For example:
- People - costs such as data entry, envelope stuffing and administration time needed to track down errors and follow up on approvals.
- Stationery & Postage - Paper, pens, postage and printer toner used to create a physical invoice.
- Storage – invoices for accounts receivable and accounts payable need to be securely stored for auditing and reporting. The cost of manually indexing and filing paper documents contributes to this shockingly high expense.
- Lost discounts & late fees - incurred while waiting for an invoice to be processed manually.
A simple equation for working out your business’s cost per invoice is:
People costs + stationery + postage costs + storage costs + late fees + lost discounts / No. of invoices = cost per invoice
Pitfalls of manual invoice processing include:
- Multiple document touch points increase the risk of inefficiency, bottlenecks and data security breaches.
- Manual data entry, document preparation and document routing are time-consuming and prone to human error.
- Manual invoice processing costs more than it should in lost time, productivity and wages.
- Lengthy handling, approval and processing times can have a knock-on effect on your business and can have a negative impact on your business cash flow.
Manual Invoice Processing V Document Automation
Wakefield Research and Concur data shows that 42% of small businesses surveyed have errors in matching invoices to clients. Additionally, 47% say they’ve experienced delays in processing vendor orders.
Error and delay, old technology, piles of paperwork and overworked staff can make invoice processing slow, laborious and costly. Not to mention the problems that occur with paper-based invoice storage systems.
According to a recent report 60% of small businesses still keep their important documents in a filing cabinet, not only is this inefficient it leaves your organisation open to potential loss and data breaches.
By replacing manual processing with automation, companies are able to slash processing costs and turn invoices around in hours instead of days. Positively impacting efficiency and cash flow.
What does a document automation process look like?
- The first part of automating the process is to capture the invoices when they come in via post. Using your Multi-Functional-Device (MFD) invoices should be scanned directly into the document management system.
- Invoices that come in via email can also be captured by workflow technology. The system can automatically classify the document, routing it to the correct person or department.
- The system can then automatically deliver accurate data to the accounting or ERP system; skyrocketing productivity without hiring additional staff.
- By adding document workflow automation into the mix, exception handling and approvals can easily be fast-tracked to streamline the process even further.
- Electronic invoicing is simpler to track and less prone to error than manual processes. Furthermore, a consolidated view makes it easier to respond to queries and administrative requests.
Accounts Receivable (AR) document automation
Every aspect of the AR process can be aided by document automation, for example:
- Outbound invoice creation for both print and digital delivery.
- Hard copy to digital invoicing migration at a pace that suits your business needs.
- Automatic formatting.
- Invoice sorting and delivery.
- An efficient, searchable filing system for all AR documentation.
- A secure GDPR compliant environment for archiving and storing.
Accounts Payable (AP) document automation
Equally, document automation can aid in every aspect of the AP process, for example:
- Inbound invoices can be captured from multiple channels; from digital and hard copy sources.
- Translation of email and digital documents and e-invoice delivery to your Enterprise Resource Planning (ERP) application.
- An easy to use filing system for all AP documents.
- A secure GDPR compliant environment for archiving and storing.
Benefits of document automation over manual invoice processing
Scalable: Document automation is scalable and flexible; enabling you to change the solution with your business needs.
Environmentally friendly: Reduce energy, paper and mail costs while supporting environmental policies by moving from paper-based to electronic invoicing. Save money and in turn positively impact your company’s carbon footprint.
Time efficient: Save time by streamlining manual workflows and increase productivity by freeing up employees to focus on other areas of the business.
Improve cash flow: Increase the speed of invoice processing and improve cash-flow management with a clear view of the funds that are due to come in and leave your organisation.
Secure and compliant: Ensure your business is GDPR compliant. Improve document security by reducing the risks associated with physical transport, handling and storage.
Document visibility: Workflow automation gives management visibility over the entire process; enabling document processes to be fast-tracked, managed, approved and ultimately dealt with faster and more cost-effectively throughout your organisation.
How Digicorp can help your business on the road to document automation
We deliver Digital Transformation through a variety of document solutions and managed services. We aim to work in partnership with our customers to optimise their workspaces by providing efficient technology and value-driven processes. To see how we can help you on the way to digital transformation, get in touch on 020 3929 3003 or request a call back.