AP automation provides businesses with a digital workflow to manage supplier invoices. However, integrating AP automation into your business processes requires some financial input.
The question then arises if investing in this technology is the way to go.
To answer this, you need to calculate the financial returns of AP automation. However, the ROI calculations of this technology are difficult as it impacts several aspects of your company, both tangible, such as cash flow, and intangible, such as savings associated with the value of reduced frustration.
Let’s then walk through AP automation’s financial and non-financial returns to better grasp how it answers the question prior and helps your business.
The Financial ROI of Invoice Automation
Manual invoice processing involves manual data entry, proofreading, correcting “fat finger” mistakes, and processing. However, AP automation streamlines and automates your AP processes, eliminating manual labour.
With advanced cloud-based automation like Rinkt Docbot, you can easily extract your invoice data. It uses advanced OCR capabilities and efficiently extracts data from any format.
The ROI of invoice automation varies with the industry type, the number of monthly invoices, and how much a particular industry spends on invoice processing. However, the average calculations for the financial returns of automation are promising.
Less Processing Cost
Manual processing of one invoice can cost $15 to $40. AP automation solutions reduce the financial cost and pay for themselves through savings on labour and costly paper checks.
Low Hard Labor Costs
The average annual salary of an AP professional is around $4,500,000. Implementing automation can reduce the hard labour cost by 30% to 35%. When you automate your invoice processing, the expenditures of labour, mailing and printing overhead, and late fees are significantly reduced.
According to a report, invoice automation can save $13 dollars per invoice on average. It means a company processing 500 invoices in a month can save as much as $78,000 in one year.
Reduced Time
Automation can reduce invoice processing time significantly. Time is money, and automation saves your employees valuable time in several ways. For instance,
- Automatically catching the header information in images and PDFs instead of time-consuming manual coding the invoices.
- Notifying the concerned person for approval when an invoice is ready.
- Eliminating the need to match invoices with purchase orders by streamlining the invoicing process.
Minimised Errors
Rectifying the errors in paper invoices can cost a business $53.50 per invoice. Moreover, an employee spends a lot of time searching for particular information or documents. AP automation eliminates these costs, spent as time, by minimising the manual work and enabling better communication with vendors, AP departments, and approvers.
Non-Financial ROI of Invoice Automation
Non-financial returns of technology are not as tempting as financial returns. However, soft benefits also contribute to a company’s success. Some soft benefits are:
Better Control
Invoice automation enables you to have unfettered control over the entire process, allowing you to determine the real-time productivity of your team. Moreover, you can better attend to any follow-ups or payment reminder notices in your system.
Productive Staff
When a company expands, the invoice volume also increases. In such cases, companies typically hire more employees. However, AP automation accommodates this need by making the existing staff more productive and speeding up the invoice processing cycle.
Streamlined Auditing
AP automation provides fast and accurate auditing as the data is well-organised. It helps track invoices’ history and check the authenticity of all purchases.
How to Calculate Automation ROI for your Company?
With these formulae, you can calculate invoice automation ROI for your company.
- Calculate future staffing savings.
(Salary + benefits + boarding cost of 1 full-time AP employee) × (number of AP employees you need as the company grows)
- Calculate early discount savings.
Cost per invoice × 10% (discount offered by supplier)
- Calculate shipping and document storage costs.
Invoice shipping cost + shredding cost + filing cost + storage cost
Using invoice automation, you can reduce these costs to $0. After utilising AP automation for some time, it is necessary to gauge the returns of AP automation.
- Calculate invoice saving using AP automation.
The current cost of invoice processing – (the cost of processing with AP × number of annual invoices)
Final Words
AP automation is one of the powerful forms of robotics to ensure accurate, robust, and cost-effective solutions. Invoice automation offers financial ROI and soft benefits that help businesses grow considerably. Saving labour costs and time, preventing late payments, eliminating manual error risks, and improving audits, AP automation has a very compelling case to be integrated into your AP department right now. Moreover, the efficiency of AP automation will let you pay early, allowing you to enjoy discounts on vendor invoices.
If you are looking to boost the efficiency and productivity of your AP department through invoice automation, get in touch now!
