Whitepaper
The Hidden Costs of
In-accurate Invoice
Processing

Invoice processing is a pivotal business function for both small and large businesses. Every business runs on the payments it receives after the successful delivery of products or services, which is why an invoice becomes one of the most important business documents. From sending invoices to authorised approvers to archiving payment information in the general ledger, the accounts payable(AP) department is responsible for the accurate and timely completion of invoice processing steps.

The Methods of Invoice
Processing

Invoice processing is a pivotal business function for both small and large businesses. Every business runs on the payments it receives after the successful delivery of products or services, which is why an invoice becomes one of the most important business documents. From sending invoices to authorised approvers to archiving payment information in the general ledger, the accounts payable(AP) department is responsible for the accurate and timely completion of invoice processing steps.

How Manual and Semi-Manual Invoice Processing is a roadblock to effective business operations

By continuing to use traditional methods of manual or semi-manual invoice processing, businesses squander time, money, and resources in contrast to their competitors, who utilise automated invoice processing systems.
 
The time taken by the AP team to process one invoice manually is almost four times that of automated software. Moreover, the cost associated with manual interventions is inevitably higher because of the manpower and logistics involved.
 
The complete cost of manual invoice processing is not visible and detectible right on the surface. Rather it is the consolidation of all the redundant hidden costs incurred in each step. For the AP department to function optimally, and ultimately benefit the business, a deeper understanding of the hidden costs of manual invoice processing is needed, along with efforts to eliminate them.
According to EY’s 2018 worldwide electronic invoicing survey report, shipping an issued invoice and accepting it costs 22 euros, as opposed to 0.30 euros for an electronic format invoice with minimal shipping costs.

Following are the hidden costs induced by manual or semi-manual invoice processing systems

Data entry expenses

Data entry is not a linear process. After filling in data, the AP department has to recheck, verify, and rectify it in case of any discrepancies. This can lead to significant operational costs and delay in payments as the workforce has to rework and correct the errors. If the primary steps are not followed in due time, the entire workflow mechanism can get disrupted. A disorganised operation can frustrate the vendor and drain the staff members.

Faulty reconciliation of Exceptions

Around 85% of professionals in the financial and shared services surveyed by Tungsten Network believe that eliminating invoice exceptions is the most cost-effective way to prevent profit leakage. Even after employing an additional workforce in handling exceptions, the prospect of a delay in payments and approval is still very high. Ultimately this can induce unnecessary expenses in the forms of fines and penalties.

Discontent clients and customers

The consequences of a disorganised and complex workflow are going to eventually reflect on the customer experience. Delayed payments will often result in frustrated clients and will result in higher supplier inquiries. Invoices delivered late or too close to the deadline negatively affect clients’ predefined processes, further creating distrust in the business.

The unsystematic nature of large-scale audits

Even if your business has enlisted an independent firm to conduct the large-scale auditing, the process still requires the close involvement of the AP department. Using traditional methods of manual invoicing can disrupt the efficiency of account payables, forcing them to prioritise tasks of reviewing, recorrecting, and recollecting transactional histories on paper.  
In a BlackLine survey on Financial Data Inaccuracies, it was found that 55% of respondents are not fully certain in identifying financial errors before reporting and authorising the payments. In this way, unsystematic large-scale auditing can lead to financial risk and fraud.

Diversion of human resources from core organisational activities

Manual invoice processing is a repetitive process that involves reviewing, recorrecting, and recollection of data on multiple levels. Human resources are diverted to completing such non-core procedures, while core operations like audit, advisory, processes, and quality control are pushed to the side. A diversion like this is detrimental to a company’s growth. Diverting resources for non-core tasks, such as manual data entry, drains time and money and incurs opportunity costs from not utilising human expertise in core invoicing operations.

SBQ’s Fully
Automatic Invoice
Processing Solution
Manual invoice processing saps money, resources, and time significantly. Furthermore, in today’s fast-paced world, businesses must optimise products and services to expand and scale—both in terms of physical expansion and finances. Effective invoice management through automation is going to reduce your company’s invoice processing cycle by almost 80%, as found out in the P2P Benchmark study.  

Automated processing with Machine Learning and Artificial Intelligence is a game-changer and has evolved way beyond standard invoice processing. It is a purpose-built technology that ensures greater control, accountability, and visibility in the financial sector. Automating complex, time-consuming and costly manual processes will help professionals redirect their expertise into comprehensive projects. Invoice processing becomes nearly four times more productive with a fully automated invoicing system.  

However, automated invoice processing has a probability of 10% machine error. It means that although automation is going to substantially reduce the number of costs, time, and resources utilised, accounts payable will have to conduct 10% of tasks manually.  

Utilising the benefits that can be reaped from combining the expertise of humans and machines, SBQ has designed a cutting-edge product with a futuristic approach.

SBQ’s Fully Automatic Invoice Bookkeeping is the solution if you are looking to eliminate hidden costs and streamline the invoice process to be less time-consuming. Our processing system works on two key aspects

Advanced ML and AI-based Automatic processing can deal with large data, logic and maintain consistency to improve accuracy.
Our human operators use their ingenuity to manually solve 10% of machine-related errors, which are difficult for machines to process. This further reduces your workload, so you will need to review only 5% of the invoices.
For the 5% of invoices with errors, the system triggers a red flag with action steps on how to handle the invoicing error, based on which type of error is detected. In turn, the time required from clients is reduced to an absolute minimum.

We have combined both to ensure 100% digital and accurate processing. Benefits of employing SBQ invoice processing are

Enhanced accuracy

Our combination of fully automatic bookkeeping with manual verification significantly reduces the probability of error. Automated processing handles the major tasks and reduces the burden of manual processing, which optimises the process and further minimises mistakes. At the same time, humans have sufficient space to manually solve minimal machine errors, resulting in 100% accuracy.

Accelerated processing

Automatic processing speeds up the approval and authorization time. With the introduction of a centralised communication system, the chances of delays in payments are reduced. Such a system directly affects the clients, vendors, or customers, making them satisfied. Furthermore, grabbing early payment discounts becomes easier and more likely.

Increased savings

Automatic processing eliminates the costs of paper, shipments, and storage. It also reduces the operational costs of reworking and managing the invoice. According to Billentis’s 2017 business case report, automated invoice processing results in 60-80% savings compared to manual processing.

Elevated productivity

Our clients who have been using fully automatic invoice processing solutions report a four-fold increase in productivity and ROI. As the duplicate invoices are reduced and employees are liberated from repetitive menial tasks, they are able to focus on critical business processes. As a result, business operations become more efficient and effective.

Eliminating fraud and risks

Secured and centralised data leads to effective vendor management and quick cross-checking. Due to the application of automatic and manual processes simultaneously, operational risks and chances of fraud are minimised extensively. Modern technological solutions based on ML and AI are here to disrupt the traditional manual invoice processing system. It provides transparency, accountability, security, and control which is essential to make workflow cost-effective and faster. SBQ integrates a fully automated invoicing system with a layer of manual verification, allowing for optimal use of human input. It is finally time to automate!

Reference articles

  • https://sfmagazine.com/post-entry/september-2020-the-real-costs-of-manual-accounting/
  • https://docsumo.com/blog/invoice-processing-automation
  • https://tipalti.com/demystifying-the-ap-invoice-approval-process/
  • https://www.docacquire.com/resources/blog/5-hidden-costs-in-manual-invoice-processing/
  • https://www.applexus.com/blogs/how-to-identify-hidden-costs-in-accounts-payable-process
  • https://chargezoom.com/3-hidden-costs-of-manual-invoice-processing/
  • https://docsumo.com/blog/manual-vs-automated-invoice-processing