What is cost per invoice?
By Tim White · Glossary · Last updated
Cost per invoice is the all-in cost of handling one supplier invoice from arrival to payment: the labor to enter, check and approve it, the cost of mistakes like duplicate payments and late fees, and the software involved. Most of it is time, which is why it stays invisible until you measure it.
How to calculate yours
Add up a month of AP costs: hours spent on payables times a loaded hourly rate, plus software, plus late fees and any duplicate payments you had to recover. Divide by the number of invoices processed.
Example: 200 invoices, 16 hours at 35 dollars, 60 dollars of software and one 90-dollar late fee. That's 710 dollars, or about 3.55 per invoice. Published benchmarks vary widely, so track your own number month to month.
What brings it down
Removing the typing helps. Removing the checking helps more. If a tool fills in fields but you still re-read every invoice, you've saved a few minutes and kept the slow part. The real savings come when clean invoices clear without review and you only look at flagged fields.
Error costs fall when duplicates are caught before payment and due dates are tracked in one list.
Common questions
Does automation lower cost per invoice?
It lowers labor when clean invoices skip review, and it lowers error costs when duplicates and overdue bills are caught. Uncertain invoices still need a person.
Sources
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