Accounts Payable, or AP automation is a broad term and therefore the cost of AP automation can vary quite significantly. AP automation software typically allows a company to perform the following parts of the AP process:
- Invoice receipt
- Invoice data extraction and/or data entry
- Electronic approval routing
- File extract to the accounting system
Various AP automation vendors charge based on the number of system users and/or a fee per invoice. These fees generally work out to somewhere between $1.25 and $2.00 per invoice.
The proper question that should be asked is “Does AP automation have a net benefit”? Various studies have shown that AP automation almost always has a negative return on investment (ROI). This is because it offers little in the way of actual improvements in efficiency. AP departments are never able to reduce staff when implementing AP automation as a result. But AP automation is quite costly in terms of the cost of processing an invoice. It is quite common for the cost of processing an invoice to increase by 50% or more.
AP automation does offer many qualitative benefits, however. This includes the elimination of paper, better visibility, improved timeliness, and better information. But there are mistakes to be avoided when transitioning to AP Outsourcing.
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