What does automated invoice processing cost?

Entering a purchase invoice by hand costs on average € 1,50 to € 5 per invoice, assuming 3 to 10 minutes of work at an internal hourly rate of € 30. Automated invoice processing with scan & recognise usually costs between 10 and 40 cents per document, sometimes topped up with a fixed amount per administration or a monthly minimum. That puts the saving per invoice at roughly 1 to 4 euros, but only for the documents that run through without correction. The real cost question is therefore not what the software costs per document, but how much manual work is left afterwards.

This article is largely general explanation with generic ranges; the amounts are assumptions you can use for your own calculations. At the end we describe how Agentancy prices its own service, and we say so explicitly.

What does entering an invoice by hand cost?

The cost of manual entry is time times hourly rate. The time per invoice depends heavily on the type of document. A tidy monthly invoice from a known supplier is posted in 2 minutes: open, check, code, save. An average invoice takes more like 3 to 5 minutes. An exception, such as a poor scan, an unknown supplier or an invoice that has to be split across several GL accounts and VAT rates, runs up to 8 to 15 minutes including looking things up and consulting colleagues.

For the hourly rate we work with € 30 an hour as the internal cost of an assistant accountant, including employer's charges. That is an assumption: use your own hourly rate, and bear in mind that every hour of data entry is also an hour not spent on billable advisory work. On that basis you arrive at the following amounts:

A firm that processes 2.000 invoices a month by hand at the average rate therefore spends around € 3.000 a month on data entry. On top of that come the costs of errors: a wrong VAT code or an invoice on the wrong administration costs a multiple of the original posting time at the quarterly review.

What does scan & recognise software usually cost?

This is general explanation about the market, without supplier names. In practice, pricing models for scan & recognise and invoice recognition come in four forms, often combined:

• Price per document. The going rate is 10 to 35 cents per recognised document. Watch what counts as a "document": a three-page invoice or an attachment can sometimes count as several units.
• Price per administration per month. Often a few euros up to about ten euros per connected administration. Check whether you pay per connected administration or per genuinely active one: with a portfolio containing many dormant administrations that makes a real difference.
• Bundles and credits. A fixed amount for, say, 500 or 5.000 documents a month. The price per document looks low, but unused credit usually expires, and above the bundle a higher rate often applies.
• Minimums and set-up costs. A firm minimum of a few tens of euros up to well over a hundred euros a month, sometimes with one-off implementation or training costs. For small firms the minimum often determines the actual price per document.

So never compare providers on the rate per document alone. Work out the total monthly amount for your own document volume, your number of administrations and your peak months, and do that for both a quiet and a busy month.

Where are the hidden costs of invoice processing?

The biggest cost of automated invoice processing is not on your software supplier's invoice: it is the manual work that remains. In practice, common scan & recognise software is far from processing everything automatically and error-free; in comparisons we work conservatively with 60 per cent automation. The rest falls out as exceptions or needs correction.

Work that through. At 2.000 documents a month and 40 per cent exceptions, 800 documents a month are left that still have to be processed or corrected by hand. At € 1,50 per document that is € 1.200 a month of hidden manual work, on top of the licence costs. And that is a cautious calculation: the exceptions are exactly where the laborious documents sit, such as receipts with poor print quality and invoices that have to be split.

Three hidden costs deserve extra attention:

• Corrections after "recognised". A high recognition rate says nothing about posting quality. A document only counts as work saved once it has been posted correctly without correction. So ask suppliers about that percentage, not about the recognition rate.
• Peak months. January and the months after a quarter-end bring more documents. Bundle models punish peaks with excess rates, while manual processing in peak months costs overtime or temporary staff. So work out your comparison over a full year.
• Errors that surface later. A wrong VAT code that only comes to light at the return costs search time, correcting postings and sometimes a supplementary return. The later an error is found, the more expensive it is.

How do you make a fair cost comparison?

The real cost of invoice processing is the sum of four items: the software costs, the remaining manual work on exceptions and corrections, the cost of errors and the time for administration and review. A fair comparison puts those four items for your current situation alongside the same four items in the new situation, calculated over a full year including peak months.

In practice that means: first measure how many documents you process a month, how many of those currently go right automatically and how much time the rest costs. Then test a new solution on your difficult documents, not on your prettiest invoices. How to set up such a trial and which questions to ask a supplier is explained in our guide to posting invoices automatically.

How does Agentancy price?

Up to here this article has been general explanation. This part is about our own prices, so you have something concrete to test the ranges above against. The current and complete terms are always on the pricing page.

Tandem sits alongside your current scan & recognise and charges only per exception document, so per document your current software cannot handle. The tiering is cumulative and counts firm-wide: all exception documents from all your administrations go on one pile within a calendar month, the tiers do not start again per administration. The first 1.000 documents a month cost € 0,40 each, the next tier up to 3.000 costs € 0,30 and above that you pay € 0,20 per document. After the free trial a firm minimum of € 40 a month applies as a floor. Compare that with the € 1,50 an exception document processed by hand costs in the basis for calculation above.

Totaal replaces your scan & recognise entirely and charges a fixed amount per active administration per month, falling as your portfolio grows: up to € 3,95 per administration in the highest tier, or € 3,49 on an annual contract. At 200 administrations that works out at around € 4,69 per administration per month. Each active administration includes 30 documents a month; above that you pay € 0,19 per document. The firm minimum of € 90 a month is a floor under the total, not a rate. Dormant administrations do not count: you only pay for administrations that actually have documents running through them.

You can start without a credit card: you try Agentancy free for 30 days or 100 documents, whichever comes first. After that processing stops by itself; nothing is quietly converted.

Conclusion: use your own figures

What does invoice processing cost? By hand, € 1,50 or more per invoice soon enough, and with scan & recognise software usually tens of cents per document plus the manual work on everything that falls out. The comparison only becomes fair once you count that remaining manual work: at many firms the exceptions are the biggest item. So take your own document volume, hourly rate and exception rate; the amounts in this article are assumptions and worked examples, not promises.

Want to see how we tackle the exception stack? Read how posting invoices automatically with Agentancy works, see which accounting packages and scan & recognise tools we support on the integrations page, or go straight to the pricing.