Change can be a frightening thing. Doing things the way they’ve always been done often seems like the easier option. However, just because something has always been done in a certain way doesn’t mean it’s always been done in the right way. Take accounts receivable and invoice presentment. Manually sending out hard-copy paper invoices to your customers is the way it’s always been done, but is it the way it should be done?
Do you know what invoice processing is costing you? According to a recent report from PYMNTS.com, the average cost to process a single invoice is between $16.00 to $22.00. Where are these costs coming from? You might be surprised to find out. There are unexpected fees and hidden costs to every invoice.
Here are four ways manual invoice processing is costing your business money:
1. Time Intensive Labor
Instead of your team spending their time completing challenging and fulfilling tasks that will further grow your business, they’re manually sending invoices and inputting data. According to a report from Ardent Partners, the average time for a business to manually process an invoice was close to 11 days. On the other hand, this number was around 3 days for the best-in-class businesses that frequently leverage invoice automation and technology. With a process that much more efficient, your employees could be freed up to put their time to a better use.
2. Costly Mistakes
Accounts Receivable, exciting as it is to you and I, doesn’t exactly get most people’s blood pumping. When people become bored, they become careless. And careless people make mistakes. But isn’t even a few mistakes a few too many? Aalto and Cambridge Universities conducted a study where it was discovered that errors in typing on average range from 1.0% to 3.2%. Those numbers might not seem too high, but if you’re manually processing 10,000 invoices every month, 320 of them would contain potentially costly mistakes. These mistakes can cost you more than money, as well. With too many errors being produced, you could be putting your customer relationships in jeopardy. A customer who’s received one too many error riddled invoices is an unhappy one, and an unhappy customer is one who might take their business elsewhere.
3. Supplies and Resources
A lot of money goes into sending a manual invoice. Beyond the paper and ink to print them and the envelopes and postage to mail them, you’re paying your employees’ salaries, and for the office space they need to work in. These expenses will only grow as your business expands. You need to be streamlining and increasing efficiency as you scale, not letting unnecessary expenses multiply.
4. Payment Delays
A survey from EY found invoices that were processed manually took on average up to 15 days to address and pay. That’s a long time to keep your cash tied up in AR and inaccessible to your business. And this doesn’t take into account how long it actually takes to send and receive the invoices by mail, which isn’t exactly known for its speed (or they probably wouldn’t call it snail mail). Consequently, when using manual invoicing processes, getting paid is that much harder. According to PYMNTS.com, there is currently a total of 3 Trillion dollars of outstanding accounts receivables owed to U.S. companies.
The good news is, there is a simple solution to reduce your invoice processing costs.
Automate your AR.
Accounts Receivable automation will not only save you time, manpower and customer-relationship threatening errors, it will save you money.
You have been using the old AR processes for years but what was good enough 20 years ago is hindering your business today. The time has come to make the change to a reliable, secure and cost-effective AR approach. Change doesn’t always seem easy, but if you want to keep the change in your pocket, it’s time to give AR automation a chance. So make a change, and save your change.