Hidden costs of manual processing of incoming invoices

Introducing changes in working methods often seems like a difficult and unnecessary endeavor, especially if current practice does not seem to be causing problems. Why change something that works? What is often neglected are the actual costs of day-to-day repetitive activities. The processing of incoming invoices is certainly one of such activities in most organizations, entailing a series of costs that are hard to notice at first glance.

Processing incoming invoices is basically a very simple process. Invoices come from suppliers, and then get approved, recorded and—finally—paid. Although this process seems easy to implement, it often involves a lot of people and, therefore, there is a greater possibility of error. At the organizational level, procedures for manual invoice processing are created with the best of intentions. However, this ultimately makes work more difficult for employees. These procedures were probably the best solution at the time, and were likely conceived to be long-term ones.

But if the “long-term” here does not include optimization, then these manual processing processes remain as a permanent part of day-to-day practice.

The basic costs of processing incoming invoices are easy to calculate: we add up the costs of staff, infrastructure and office equipment, and divide the amount with the number of invoices per year.

However, what this data will not show us are the hidden costs of manual processing of incoming invoices.

Processing Time: Manual invoice processing requires the cooperation of various departments in the organization. Even if the processing itself goes smoothly, a lot of time is lost on verifying invoices, submitting to relevant departments, bookkeeping and payment. Employees waste time finding the persons responsible for approving individual invoices – time that could certainly be used for more important tasks.

Human Errors: processing invoices requires a lot of attention and strong focus, while errors happen to even the most experienced employees. In short - the more steps in invoice processing, the more likely it is that someone in this chain will make an error. Even the smallest errors can lead to breach of deadlines, resulting in additional costs of staff, who must invest additional time to correct errors.

Productivity: One aspect of the manual processing of incoming invoices that is often overlooked is how monotony of the process itself. Working on repetitive, tedious tasks that are repeated daily leads to a drop in concentration and thus increases the possibility of error.

Negligent conduct: Lack of transparency reduces the possibility of quality monitoring of all steps in process execution, thus creating fertile ground for abuse or negligent conduct of an individual, which can harm the entire organization.

How does OWIS reduce the costs of processing incoming invoices?

Some tasks cannot be completely canceled, but it is possible to avoid additional costs and frustrations resulting from process inefficiencies. Using OWIS, tasks that can take hours can be completed in a minute. You no longer have to worry about losing a document - there is an encompassing insight into each segment of the process and its accompanying content. Likewise, OWIS enables the creation of a sequential process that specifies who is responsible for which step in the process. This reduces the possibility of error or abuse, while increasing productivity.

Try out the OWIS’ solution for processing incoming invoices and let us know if you manage to reduce costs yourself.