Invoice costs: What’s the cost of processing an invoice?

Nothing in business is free, including invoice processing. Learn what impacts the cost of invoice processing to help reduce expenses.

What’s involved in invoice processing?

What is an invoice, and what’s involved in processing one? An invoice is a document a vendor sends to request payment for their goods or services.

Invoice processing involves receiving and logging incoming invoices into your accounting system. Your accounts payable team will review them for accuracy, verifying details such as the amount, the vendor’s information, and the quantity of items received.

Once the invoice is validated, the appropriate department or manager will approve the invoice for payment according to your agreement with the vendor.

While some invoices are due upon receipt, others are due within a specified period, such as 7, 14, or 30 days after receipt. Finally, you’ll pay your vendor, concluding the purchasing cycle.

What’s the average cost to process an invoice?

The cost of invoice processing varies, but most businesses spend between $15 and $40 per invoice. To get to the lower end of the spectrum, review the elements that can impact invoice costs and streamline your accounts payable.

Remember that your costs will vary depending on the type of invoice you’re using.

Paper invoicing processes will drive up your administrative costs and potentially lead to late fees, especially if you experience delays in the approval process. Conversely, automating the processing workflow could reduce your administrative burden and cut down on costs.

What factors affect invoice costs?

To calculate the cost of invoice processing for your business, you need to know the elements that impact expenses. The following aspects can have a significant impact on invoice processing costs:

• Errors
• Labor
• Vendor relationships
• Supply chain
• Office supplies
• Time waste
• Accounting software
• Mail costs
• Credit card processing fees

Dozens, if not hundreds, of things can impact costs between writing an invoice and making a payment. Plus, they can quickly add up if you’re not careful.

Transaction fees and the cost to process an invoice.

When processing an invoice, your business will often encounter various transaction fees. Credit card fees are a common expense if you accept this payment method. They’ll vary depending on your payment processor’s terms and conditions but usually range from 1.5% to 3.5% of the transaction amount.

You may also incur fees associated with payment processing software, bank charges for wire transfers, and payment cycle administrative expenses. These fees can quickly add up and negatively impact your bottom line.

Late fees and rejected payments will also increase invoice costs. Pass these expenses to your clients if they fail to remit on-time payments.

How to reduce invoice costs.

The best way to reduce invoice processing costs is to streamline your processes. Most businesses turn to accounts payable (AP) automation software to reduce some of the more error-prone and time-consuming manual processes. Automation can slash your invoicing costs by:

• Reducing delays
• Decreasing manual labor expenses
• Unlocking savings via early payment discounts

You should also invoice your customers using digital tools. Accepting purchase orders and sending invoices via a unified, interconnected platform will decrease your processing costs and accelerate the ordering process for your clients.

After learning how to write an invoice, you can explore complementary documents to make purchasing easier for everyone. For example, you can use pro forma invoices to improve transparency and obtain a detailed estimate of order costs. These documents help you better understand upcoming expenses so you can approve and allocate funds before the final invoice is issued.

Simplify and reduce invoice costs with Adobe.

Since processing an invoice requires a lot of approval, using e-signature software like Adobe Acrobat can help everything move more smoothly. Instead of dealing with printers and scanners, AP managers can approve and sign invoices with the click of a mouse. Fewer steps mean decreased labor, fewer errors, and reduced invoice costs.

Discover more about how Acrobat for business can help you with the cost of invoice processing by simplifying payment approvals.