Accounts payable Costs Calculator
Curious about how much your accounts payable process is really costing you? Use our calculator to estimate your AP expenses and discover potential savings with AP automation.
AP Cost Calculator
Understanding Invoice Processing Costs
Invoice processing costs encompass all expenses incurred from the receipt of an invoice to its final payment. These costs can be categorized into direct and indirect expenses:
Direct Costs:
Labor costs for accounts payable staff, expenses for paper, printing, and postage.
Indirect Costs:
Costs related to errors, late payments, and missed discounts.
According to industry research, the average cost to process a single invoice ranges from $15 to $40, with smaller businesses often experiencing higher costs.
How Much Is Your AP Process Costing You?
Efficient invoice processing is critical to your restaurant’s financial health and supplier relationships. Traditional accounts payable methods often come with high costs:
High labor expenses for AP staff.
Frequent errors leading to late payments.
Missed opportunities for early payment discounts.
The industry average cost to process a single invoice ranges from $15 to $40, with smaller businesses often paying more. Imagine the savings if you could cut those costs in half.
At Over Easy Office, we provide solutions that streamline your AP operations—saving you time and money.
Key Metrics in Invoice Processing
To assess the efficiency of your invoice processing system, consider the following metrics:
Number of Invoices Processed per Month: This metric helps in understanding the workload and scalability of your accounts payable department.
Internal Employee Salary or Full-Time Equivalent (FTE) Cost: The total cost of employing staff dedicated to invoice processing.
Time Spent per Invoice: This includes:
Data Entry Time: Time taken to input invoice data into the system.
Approval Time: Time required to review and approve invoices.
Communication Time: Time spent communicating with suppliers regarding invoice status or issues.
Payment and Reconciliation Time: Time taken to execute payments and reconcile accounts.
Calculating Invoice Processing Costs
To calculate the cost per invoice, use the following formula:
cost per invoice:
Cost per Invoice = (Total Monthly Processing Costs) / (Number of Invoices Processed per Month)
Example Calculation:
Assume your organization processes 500 invoices per month, with a total monthly processing cost of $10,000. The cost per invoice would be:
Cost per Invoice = $10,000 / 500 = $20
This indicates that it costs your organization $20 to process each invoice.
Strategies to Reduce Invoice Processing Costs
Reducing invoice processing costs can lead to significant savings and improved operational efficiency. Consider implementing the following strategies:
Automate Invoice Processing: Utilize accounts payable automation solutions to reduce manual data entry, minimize errors, and accelerate processing times. Automation can lead to a substantial decrease in processing costs. Check out OEO’s AP Automation.
Implement Electronic Invoicing (e-Invoicing): Transitioning to e-invoicing reduces paper usage, lowers processing times, and enhances accuracy.
Standardize Processes: Establish standardized procedures for invoice receipt, approval, and payment to streamline operations and reduce variability.
Enhance Supplier Communication: Foster clear and open communication channels with suppliers to promptly address discrepancies and avoid delays.
How OEO’s Accounts Payable Automation Works
Our platform and dedicated team of global experts handle the entire AP workflow for your restaurant group:
-
Eliminate manual data entry by automating invoice capture and matching invoices with purchase orders.
-
Minimize costly errors with automated checks and validations.
-
Avoid late fees and capture early payment discounts by scheduling payments strategically.
-
Gain actionable insights into your AP process with customized dashboards.
To understand even more how our AP automation works, including the vast accounting ecosystems that we integrate with and our current plans, feel free to visit AP Automation for Restaurants for more insights.
Take Action Today!
Now that youve discovered how much you can save automating yur accounts payable it's time to take the next step.
Book a free consultation with our restaurant experts and discover how close you are to reaching profitability.
With Over Easy Office, you’ll gain a partner dedicated to stabilizing costs and boosting profits with expert, restaurant-focused support. Let’s grow your business together!