Electronic Invoicing: The Single Best Way to Lower Invoice Costs

Electronic Invoicing: The Single Best Way to Lower Invoice Costs

A version of this post was originally published on the Nexus Systems blog.

An unintended consequence of declining paper invoice volumes is that many payables departments are struggling to cost effectively process invoices that arrive via e-mail, fax and supplier portal. Without automation, processing these electronic invoices is nearly as costly as processing paper.


The average cost to process an invoice stands at $12.90, with a median invoice processing cost of $7.90, according to research from the Association for Image and Information Management (AIIM). However, average invoice processing costs do not tell the whole story about the costs of accounts payable. Businesses surveyed by AIIM say it costs them an average of 2.2 times more (and a median of 1.65 times more) to process invoices that do not have a purchase order compared to purchase order-based invoices. This puts the cost to process a non PO-based invoice at between $18 per invoice and $25 per invoice. What’s more, one quarter of businesses say it costs them at least three  times as much to process an invoice that does not have a purchase order compared to purchase order-based invoices.

Research from the Institute of Financial Operations (IOFM) fingers two culprits for these high costs:

  • only 22 percent of accounts payable departments have a high level of automation; and
  • many automated solutions are “hard-wired” to process paper invoices.

AP Automation solutions, such as MRI AP Automation Powered by Nexus Systems, solve these challenges with a single platform for receiving and processing invoices that arrive in any format, from any source.

Automating the receipt, extraction and validation of invoice information eliminates the manual keying and paper handling that drives up the costs of most accounts payable departments.

Eliminating these costs is a big reason that best-in-class organizations spend one-fifth what it costs peers to process an invoice from receipt to approval ($3.34 versus $16.67), Aberdeen Group reports.  Ardent Partners finds that best-in-class organizations can reduce their invoice processing costs by 82 percent compared to peers, in large part, by eliminating paper processes.  It is no wonder reducing costs ranks among the top accounts payables concerns of organizations surveyed by IOFM.

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