How Much Does It Cost to Send an Invoice?

According to experts, the cost of a paper invoice can range between $12 to $30 to process with an average cost close to $15.

While larger companies with a more complex accounts payable process can cost nearly $40 per invoice. Online automated invoicing cost significantly less at about $3.50 per invoice process. Automation can save your company hundreds of thousands of dollars per year.

This article will also cover:

The Cost of Sending Manual Invoices

5 Steps to Calculate Price per Invoice

The Cost of Sending Manual Invoices

Sending manual invoices can be pricey but the majority of businesses still do it. So let’s take a look at the costs of the invoicing process.

Direct Costs:  these are costs related to paper, ink and postage costs involving paper invoicing. These overhead costs will vary from business to business, but it’ll cost you at least 47 cents just to mail a first-class letter. While that doesn’t seem like much, it can add up when you’re sending out multiple invoices a week.

Indirect Costs: are the expenses associated with completing a task. To send an invoice, you have to pay an employee to input relevant data to produce the invoice and put the paper invoice in the envelope. Manually invoicing costs more because of the manpower it takes to do the job.

Hidden Costs: are the potential hidden costs in your invoice process. The lag-time associated with a customer receiving your invoice in the mail could negatively impact your cash flow. Additional time will be needed to reconcile any errors on the manual invoice. Sometimes, it can cost over $50 to resolve those errors.

Here are some factors to consider when calculating the costs of sending an invoice:

• Time it takes to process and mail the invoices
• Hours spent reviewing each invoice
• Hours spent finding and correcting data entry errors
• Cost to ship and store each invoice
• Hours of productivity lost to invoicing
• Amount lost on early-discounts or late fees

5 Steps to Calculate Price per Invoice

The equation for calculating the price per invoice: calculate the total annual cost of the Accounts Payable department (usually the salary total) and divide it by the total number of invoices processed annually.

You can get an even more accurate number by following these five steps.

1) Map the Process

This might be the hardest step because you need a thorough understanding of the process and all its challenges and obstacles. Follow the entire invoice process from handling the mail to filing after completion. This will give you a clear idea of the time spent on invoicing.

2) Who Is Involved in the Process

Do you know how many people are involved in each step you listed out in the mapping process? Think about everyone involved, not just the accounts payable department, but everyone involved in the coding and approval steps. In larger organizations, this can be done by people in many different departments.

3) Time Is Spent on Each Step of the Process

Now that you know who is doing what, you have to understand how long it takes each team member to complete their tasks. Ask team members to estimate the time they are spending in their role of processing an invoice.

4) Amount People Getting Paid per Hour

Now that you know who is involved, what they are doing and how much time they are spending doing it – it’s time to factor in their rate of pay. Break down the cost per minute, if that makes more sense in terms of how long each task takes.

5) Do the Math

Now that you have all the relevant information, it is time to do the formula to find out your cost per invoice. Multiply the number of people by the amount of time spent on each task by their salary to come up with a dollar value for how much the process cost per invoice.

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