Are you still processing customer invoices manually? Are your people still creating paper invoices from scratch each time you bill a customer? Are your people still folding invoices, stuffing envelopes, affixing postage stamps and mailing to your customers? If you answered yes to these questions, then invoicing is costing you more than you think.
The cost of invoicing is often overlooked. Invoicing is one of those low profile, back-office activities that occurs after a sale is made. The vast majority of invoicing is still done manually. If you asked most people what it costs to manually create and mail a customer invoice, they would probably guess around $1.00, thinking of postage, paper, envelope and a little cost to process. In reality the cost to manually process and mail a customer invoice can be 10 to 40 times that amount. Here are some industry estimates of the cost to manually process and mail a customer invoice.
VARIABLE AND INDIRECT COSTS
These estimates take into consideration the variable and indirect costs of manually processing and mailing a customer invoice. The variable costs are obvious – printer supplies, envelopes, paper and postage. Indirect costs including overhead and personnel costs are less obvious, but they are real. Even if you can’t reduce indirect costs if invoicing volume goes down, these resources become available for use in some other more productive activity.
COST REDUCTION POTENTIAL
Automating your customer invoicing can substantially reduce these variable and indirect costs, and save you more than you think. Here are some industry estimates of the savings of automating customer invoicing.
- Accounts Payable Network estimates a savings of 60-80% with a cost of $5.00 or less per invoice.
- Concur says costs could be 29% lower, which translates into an annual savings of $300K for a company processing 10,000 invoices per month.
- Sterling Commerce pegs the fully automated cost at $3.50 per invoice.
As substantial as these cost saving estimates are, they do not take into consideration the opportunity cost savings potential from fully automating customer invoicing. If you are still invoicing manually, it probably takes you two weeks or more after an order is shipped or service provided, to process, mail and have a customer receive an invoice. The opportunity cost of having your cash tied up in the additional time involved in manual processing can be very substantial. Think of the boost your company would get from having two or more weeks of additional cash flow.
Fully automated invoicing can pay for itself and more by providing features that reduce costs and increase cash flow including:
- Invoice templates to eliminate recreating invoices
- Email and text invoice copies to save time versus snail mail
- Links on invoices to online payment options to speed up collections
- Reminder emails and text messages with invoice copies attached
When you automate invoicing you should partner with an experienced software provider with a history of successful invoice automation.
Lockstep Collect is a leader in cloud-based and premise-based software solutions made especially for businesses selling on credit.
If you would like to learn more about how you can benefit from invoice automation, please contact Lockstep Collect at www.lockstep.io.