How to Calculate the ROI on your Accounts Payable Automation Investment

Thinking about automating your accounts payable process, but not sure if it’s worth the investment? You’re not alone.

According to recent data, only 5% of accounts payable teams have fully automated their processes, while the majority are still stuck in manual or semi-automated workflows. That’s a lot of time and money being left on the table.

While AP automation doesn’t get the same hype as sales or marketing tech, its impact on cost, speed, and accuracy is hard to ignore.

So, how do you measure that impact? How do you prove the ROI of AP automation to decision-makers, or maybe even to yourself?

In this guide, we’ll break it down for you. You’ll see what manual AP is really costing you, what automation can save you, and how to calculate a clear, convincing return on your investment. We’ve even included a free ROI calculator to make the math easy.

Ready?

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Key Takeaways

• Manual AP slows you down and costs more than you think. It’s time-consuming, error-prone, and expensive at scale.

• Automation saves time, money, and effort. You can reduce processing time by 70% and errors by 90% or more.

• The ROI is real and can reach 700%. Most businesses recover their investment within the first year.

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A Fresh Reminder on the Accounts Payable Process

Before we dive into ROI, let’s quickly rewind. What is accounts payable, really?

At a basic level, it’s how businesses handle the money they owe, usually to suppliers or service providers. An invoice comes in, someone reviews it, approves it, pays it, and records it. Simple, right?

Well… not quite.

Even the most straightforward AP process is made up of a lot of moving parts, especially when it’s still manual.

Here’s what that usually looks like:

• Invoices coming in from every direction – email, PDFs, even paper
• Manually entering data into your system
• Matching each invoice with a purchase order (if there is one)
• Routing it to the right person for approval (and following up when they forget)
• Scheduling the payment
• Filing it away for audits, finance reports, or when someone asks about it six months later

When you’re only processing a few invoices a month, it’s manageable. But for most businesses, those invoices pile up fast, and so do the delays, errors, and admin hours.

Now let’s see how much all that manual work is costing you.

The Hidden Costs of Manual AP

According to Ardent Partners’ “State of ePayables” report, the top challenges AP teams face today include manual invoice routing, too much paper, and data entry errors – the same issues that have slowed teams down for years. Add in lost invoices, approval delays, and the occasional duplicate payment, and it’s easy to see why so many teams are looking for a better way.

Here’s where manual AP really starts to hurt:

1. It’s costly

Manual invoice processing isn’t cheap. According to the latest statistics, the average all-in cost to process a single invoice is $9.40. That includes staff time, technology, and overhead. Multiply that by hundreds or thousands of invoices per month, and you’re looking at a serious cost just to keep up with day-to-day operations. And if your process is less efficient than average, the number only goes up.

2. It’s slow

The same data shows that it takes an average of 9.15 days to process just one invoice. That’s over a week of reviewing, routing, approvals, and follow-ups. That kind of delay can lead to late fees, missed discounts, and suppliers left wondering when they’re getting paid.

3. It’s error-prone

Typos, missing POs, duplicate entries… they’re easy to make when everything’s done manually. And in AP, even one mistake can mean extra work or costly errors.

4. It makes you lose money

Manual AP makes it easy to miss things – unused credit notes, early-payment discounts, or even duplicate payments. It also increases the risk of fraud, overpayments, and tax mismanagement. These issues can be hard to spot in the moment, but quietly drain money from your operations. And for companies processing large volumes of invoices, those small leaks can add up to a serious financial hit over time.

5. It’s boring

Nobody wants to sit at the same old desk and enter mind-numbing data for hours, right? But unfortunately, that’s what manual invoice processing is about. It consists of tedious and repetitive tasks that, most likely, lead to a bored and inefficient team.

Luckily, there is a solution to these problems that correlates with some of the best practices in accounts payable: AP automation!

How AP Automation Solves These Challenges

As the name suggests, AP automation refers to technology that is used to streamline and automate accounts payable processes, removing manual tasks and providing more visibility and control over important financial data.

Here’s how automation changes the game:

1. It dramatically cuts down processing time

On average, adopting AP automation in an AP department can reduce time spent on a manual AP process by as much as 70%, leaving staff with much more time to deal with other responsibilities. The logic behind it is quite simple: technologies like OCR digitize the information on invoices almost instantly. What was previously a slow and repetitive data entry process is now done within seconds.

2. It shortens turnaround times from days to minutes

As we’ve seen above, it takes businesses an average of 9.15 days to process a single invoice manually. With a solid AP automation solution, the amount of time between receiving an invoice and making the payment can become much shorter, thereby decreasing turnaround times and improving relationships with suppliers. You will also have more real-time insights in your financial situation and avoid late payment penalties due to payment delays.

3. It leads to fewer errors (and stress)

Data entry mistakes, duplicate payments, missing POs – these issues are common in manual AP. Automation tools use OCR to extract data accurately and flag issues early before they turn into bigger problems. In fact, companies have seen up to 97% fewer errors after switching to automated invoice workflows.

4. It’s accessible from anywhere

Paper-based processes tie your team to the office. With cloud-based AP automation, invoices can be submitted, approved, and paid from anywhere. Managers can approve invoices on the go, and finance teams can keep things moving even when remote.

5. It cuts costs significantly

Fully automated invoices cost a fraction of their manual counterparts. With manual processing averaging $9.40 per invoice, switching to automation, where costs often drop to around $3.50, can generate major savings at scale.

Next to that, think about the costs of shipping invoices to a central location for processing. Or the costs of storing boxes, cabinets and other archiving tools full of paper invoices and documents. Those are real tangible costs that are eliminated with AP automation software.

From faster processing and fewer errors to major cost savings, automation clearly solves the biggest pain points in AP. But of course, it’s still an investment. So, how much does it actually cost to implement?

Let’s break it down.

What are the Costs of Accounts Payable Automation?

The cost of AP automation can vary depending on your business size, invoice volume, and the features you need. But in general, there are a few key components to consider:

Software Licensing or Subscription Fees

AP automation providers generally use a Software-as-a-Service (SaaS) pricing plan. They offer you a cost per license per user or a monthly subscription fee based on the level of features and a maximum number of documents and users. You can make it as expensive (or as inexpensive) as you like, but normally the price per user ranges from €4 to €25, sometimes combined with a price per invoice ranging from €0.10 to €0.50.

Setup and Implementation

Some solutions are plug-and-play. Others need more IT involvement, especially if you’re integrating with your ERP or setting up custom rules.

Setup costs can include data integrations, workflow configuration, training and onboarding, and dashboard customization. For off-the-shelf SaaS tools, setup fees are usually a few thousand euros at most. But for enterprise-grade solutions with lots of customization, that number can go well into the tens of thousands or more.

System and Process Changes

While automating your AP process, changes in the systems you use and the methods you apply will follow. Your employees have to get used to the new way of working. It would help if you quantified the changes and factored in the costs and time involved in the change management process.

Additional Hardware

Most software providers have mobile apps available so that you can scan documents with just your smartphone. Easy as that! In such a case, you don’t have to invest in additional scanning equipment. However, don’t forget to factor in the costs of hardware scanners if you believe you need them.

How to Calculate the ROI on Your AP Automation Investment?

Now that we’ve covered both the benefits and the costs of AP automation, it’s time to answer the big question: what’s the return?

To keep things simple, we’ll focus only on tangible savings — mainly labor costs and error reduction. We’re leaving out case-by-case factors like early-payment discounts or storage cost savings, which can vary widely.

In the process of calculating the ROI of an AP automation tool, we consider the following parameters (you can customize these parameters to your liking):

• The average number of invoices from your suppliers per month
  Let’s say your company processes 500 invoices per month. That’s a reasonable estimate for many mid-sized businesses.
  
  
• The average time spent on processing one invoice
  The industry average AP practitioner processes 5 manual invoices per hour (i.e., 12 minutes per invoice). This includes data entry, proofing the manual entry, and processing the invoice.
  
  The average AP automation tool enables that same practitioner to process invoices six times faster, which translates into an average of 30 invoices per hour (i.e., 2 minutes per invoice).
  
  
• The average time spent on approving one invoice
  In addition to processing an invoice, an approver must check and approve it. Let’s assume the average approver, often a manager, approves 10 manual invoices an hour (i.e., 6 minutes per invoice).
  
  With an AP automation tool, this can be done electronically, and the approver should be able to work twice as fast, translating into an average of 20 approvals per hour (i.e., 3 minutes per invoice).
  
  
• The percentage of invoices with errors
  As discussed, mistakes happen, whether you like it or not. We suppose that 10% of the invoices contain errors, either right from the start made by the supplier or after faulty processing by employees.
  
  
• The average time spent on correcting one invoice
  Spotting the error, sending the invoice back, asking for more information and correcting the invoice can be a time-consuming process. We assume that an employee corrects 3 manual invoices an hour (i.e. 20 minutes per invoice).
  
  An automated solution doesn’t add errors to the process, so the only faulty invoices that remain are the ones coming directly from the supplier. Your employee only has to take some time to send the faulty invoices back to the supplier, optionally with a few comments. Five minutes per invoice should suffice.
  
  
• The average hourly salary
  Industry averages say that an AP practitioner’s all-in cost to a company (salary plus benefits) is about €30 per hour. We don’t take into account the – assumed – higher salary of the approver.
  
  
• Setup and integration fee
  Let’s suppose the software provider is in a generous mood and charges you “only” €2500 for the initial setup. You also want the AP automation tool to be integrated with your ERP system. This costs you €100 per month extra.
  
  
• Monthly subscription fee
  With 500 invoices per month, i.e., 6000 invoices per year, and up to 10 users, you end up in the software provider’s premium tier. You pay €0.19 per invoice and €5 per user. This costs you €145 on a monthly basis.
  

In the situation above, you spent ~167 hours per month on processing, approving, and correcting invoices. This results in a 60k payslip per year (166.7 hours x €30 x 12 months). Thanks to the benefits of automation, the number of hours spent can be reduced to ~46 hours, resulting in a labor cost saving of 43.5k per year!

Take this number and divide it by the total first-year investment (€2500 setup + €145 x 12 months usage + €100 x 12 months integrations), and there it is: an ROI of 700% (i.e., factor 7) on your AP automation investment!

Want to Run the Numbers Yourself?

Do you want to see the exact calculations? Or do you want to calculate the ROI for your specific situation?

Feel free to download our free template for ROI calculation on AP automation and try it out.

How to Get Started with AP Automation

You’ve seen the time savings. You’ve seen the cost reduction. You’ve even seen how to calculate the ROI down to the cent. Now it’s time to bring those numbers to life.

Klippa SpendControl helps you eliminate the manual work that slows down your accounts payable process. Our intuitive automation platform captures invoice data with industry-leading OCR, routes it through custom approval flows, and syncs everything with your accounting or ERP system – all in one place.

You get full visibility, fewer errors, and faster approvals without the admin overload!

SpendControl gives you access to powerful features like:

• Fast, accurate invoice processing with in-house OCR
• Multi-level approval workflows tailored to your team
• Real-time spend visibility in a centralized dashboard
• Built-in compliance with local tax and reporting rules
• Corporate card integrations for streamlined expense management
• Mobile and desktop access so you can work from anywhere
• Machine learning-powered fraud detection
• Automatic currency conversion for international invoices
• Plug-and-play integrations with major ERP and accounting systems

And to make sure everything runs smoothly, our product specialists will support you through onboarding, setup, and beyond.

If you’re ready to free your team from repetitive AP tasks and actually see a return on your investment, book a free demo with one of our specialists today. We’ll show you how Klippa SpendControl works and how it can deliver real results for your business.

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