The Cost of Manual Accounts Payable

The Costs of Outdated Processes and Payments Add Up. Here's Why.

Accounts payable staff time accounts for the majority of that cost with supplies, bank fees, mailroom, administrative, and infrastructure accounting for the rest. The cost to manually process an invoice and pay suppliers by check varies across companies and depends on how each organization’s AP department and accounting operates, but there are common issues across companies that paint a picture of the inefficiency caused by manual AP processes.

Manual processing of a single invoice can cost a business over $13 and takes three weeks, according to Ardent Partners. The steps involved in manual processing include opening envelopes, printing and scanning emailed invoices, entering data into the AP system, reviewing invoices in ERP, matching invoices to approved POs, handling exceptions, coding non-PO invoices to the general ledger, chasing down approvals, and sending paper invoices to storage. Infrastructure costs include ERP, IT support, facilities, and storage. Vendor relations involve responding to payment status inquiries, while reporting involves compiling data for insights on AP performance.

The cost of making a check payment ranges from $4 to $12, and despite this, 40% of B2B payments are still made by check. The cost components of check payments include supplies such as check paper, envelopes, printers, ink, and postage. Manual check printing and mailing tasks encompass chasing down approvals, creating check print files, printing checks, obtaining signatures, stuffing envelopes, applying postage, mailing checks, and creating and transmitting positive pay files. Additionally, there are costs to reissue lost checks and various bank fees for check clearing, positive pay, reconciliation files, and check image files. Infrastructure and fraud risks, such as losses from stolen checks, also add to the costs.

Automating accounts payable (AP) can significantly reduce these costs and improve financial outcomes. AP staff can focus on more value-add activities instead of keying and re-keying information and following up on approvals. Automated systems reduce the need for printing and mailing checks, eliminate positive pay bank fees, and alleviate the burden of escheatment tracking. They also mitigate fraud risk, prevent late payment fees, capture early payment discounts, and create rebate opportunities through ACH and virtual card payments, thus enhancing cash flow.

Bottomline offers a solution to these challenges. As the largest B2B payments network, Paymode from Bottomline processes over $400 billion in payments annually to more than 550,000 suppliers without any fraud. By digitizing supplier invoice processing and payments, Paymode decreases manual tasks and paperwork, reduces fraud risk, increases cash visibility, and creates rebate opportunities, ultimately boosting cash flow. Most customers reduce their AP processing costs by over 50%, demonstrating its effectiveness in transforming AP processes and generating substantial financial benefits.