| For any business investment, you need to prove that | | | | clients can charge you. The law says you can be |
| it will bring a financial benefit. This article explains how | | | | charged a late fee of up to £100 depending |
| invoice automation solutions quickly pay for | | | | on the amount of the invoice, as well as interest |
| themselves. | | | | calculated at the Bank of England base rate plus 8%. |
| Creating an ROI for Invoice Automation | | | | For a £5,000 debt which is late, you could |
| Although you may know that your accounts | | | | actually end up paying at least an extra £400 |
| department's systems and processes for dealing with | | | | unnecessarily. |
| vendor invoices need updating, if managers are to be | | | | Fewer errors |
| persuaded to invest in an invoice automation solution, | | | | Invoice automation will reduce the number of errors |
| they will want to see evidence that they will get a | | | | made on invoice payments. IOMA figures suggest |
| good return on their investment. By doing your | | | | that the average invoice error rate for businesses is |
| research, you can prove this to them. | | | | 1.4%. Errors include over-payments, under-payments, |
| Statistics from Zona Research reveal that the | | | | inability to match invoices and PO numbers, and lost |
| majority of businesses that use invoice automation | | | | invoices. |
| make back their investments within six months of | | | | According to IOMA, 17% of businesses say that their |
| implementation. These are the main areas where | | | | duplicate invoice payment rate is between 0.1 and |
| invoice automation will save your business money:o | | | | 0.5%. If your company had a duplicate payment rate |
| Labour costso Speed of paymento Payment | | | | of 0.3% on £150 million worth of invoices, this |
| accuracyo Costs associated with storageo Post, | | | | would represent an overpayment of £450,000 |
| photocopying, faxing etc. costs | | | | per year. You could recover these costs but this |
| Labour costs | | | | might mean paying a third party. It would almost |
| Labour costs come from staff time spent:o Sorting | | | | certainly mean wasted time and hassle. |
| invoiceso Matching invoices with PO numberso Filingo | | | | Storage |
| Inputting invoice datao Processing invoices (copying, | | | | Research has revealed that it costs around |
| faxing etc.)o Looking for misfiled invoiceso | | | | £11 to file each paper document. On- and |
| Investigating invoice disputes | | | | off-site storage costs add up. Automated invoice |
| Figures from the Institute of Management and | | | | processing drastically reduces the number of paper |
| Administration (IOMA), suggest that it costs | | | | documents you need to store. Therefore, your |
| companies who don't use invoice automation | | | | storage costs will go down and you won't need to |
| £7 to process each vendor invoice. On the | | | | spend money on equipment such as filing cabinets. |
| other hand, firms who do use automation have been | | | | Say your company spent £300 per month |
| found to reduce this to £4.20 - a 60% saving. | | | | before invoice automation on storage costs, you |
| Greater control over when invoices are paid | | | | could realistically save £3,600 every year. |
| Being able to control when your invoices are paid | | | | Printing, faxing, copying and posting |
| through invoice automation means you will waste less | | | | The costs associated with processing invoices, such |
| company money on fines for late payments. It also | | | | as printing, faxing, photocopying and posting all add |
| means you'll be able to take advantage of late | | | | up. Invoice automation makes these processes |
| payment incentives. | | | | largely redundant and therefore reduces costs. |
| Usually an early payment incentive will be a discount | | | | According to Gartner Group, a company which |
| of 2% for 10% of the invoice amount. As an | | | | processed 50,000 invoices each year could make an |
| example, a 2% discount on a £2,500 invoice | | | | annual saving of £25,000 on photocopying |
| will result in a saving of £50. | | | | costs alone. |
| Don't forget that legally if you pay your invoices late, | | | | |