10 Signs Your AP Process Is Costing You More Than It Should
10 Signs Your AP Process Is Costing You More Than It Should
Most companies don't realize how much money their inefficient AP processes are costing them.
Here’s a wake-up call: The average company spends $9.87 to process a single invoice. Meanwhile, top performers using AP automation pay just $2.81 per invoice. That's a 71% difference that goes straight to your bottom line.
Let's explore the 10 warning signs that your AP process is eating into your profits:
1. Your Invoice Processing Costs Are Through the Roof
The Warning Sign: Spending more than $10 to process a single invoice.
When you add up labor, technology, and overhead costs for invoice processing, the numbers are often shocking. Companies with manual processes typically spend 3-5 times more than those with streamlined systems.
Example: A manufacturing company processing 3,000 monthly invoices at $15 each spends $540,000 annually just pushing paper. That's money that could fund growth or innovation.
2. Invoice Approvals Move at a Snail's Pace
The Warning Sign: Invoice approval cycles taking longer than 10 days.
While the industry average is 10.1 days to process an invoice, best-in-class companies complete the cycle in just 3.4 days. When approvals move slowly, your entire financial operation suffers. This leads to:
Longer cash conversion cycles
Missed early payment discounts
Strained vendor relationships
Operational delays waiting for approvals
3. You’re Missing Early Payment Discounts
The Warning Sign: Inability to consistently capture vendor discounts.
Suppliers often offer discounts for early payment, typically 2% if paid within 10 days. When your AP process can't capture these opportunities, you're leaving money on the table.
Example: For a company with $10 million in annual spending, capturing just half of possible 2% discounts represents $100,000 in savings every year. This is pure profit that goes straight to the bottom line.
4. Late Payment Penalties Are Eating Into Your Profits
The Warning Sign: Regularly paying late fees.
Late payment fees typically range from 1-5% of invoice amounts. Beyond direct cost, late payments damage supplier relationships and can lead to:
Higher pricing on future purchases
Stricter payment terms
Potential supply chain disruptions
Damage to your company's reputation
5. Duplicate or Lost Invoices Are a Regular Headache
The Warning Sign: No clear audit trail for invoices from receipt to payment.
Without a centralized system, invoices get lost in email inboxes or paid twice. For companies processing thousands of invoices monthly, even a small percentage of duplicates represents significant wasted spend.
Example: A retail chain discovered they had paid the same vendor twice for 17 different invoices in a single quarter. This resulted in over $28,000 in overpayments that required time-consuming reconciliation to recover.
6. Your Exception Rate Is Sky-High
The Warning Sign: More than 20% of invoices require special handling.
Exceptions occur when invoices have missing information, approval bottlenecks, or coding errors. The industry average exception rate is 20.7%. Best-in-class organizations maintain rates of around 11%.
High exception rates create bottlenecks that delay payments and increase processing costs across your entire AP operation.
7. You Have Limited Visibility Into Cash Flow
The Warning Sign: Inability to produce accurate payables forecasts on demand.
Clear visibility into payables gives finance leaders a strategic advantage. Without accurate data on outstanding invoices and payment timelines, your company faces:
Difficulty planning for major expenditures
Suboptimal use of available cash
Potential liquidity issues
Missed opportunities for strategic payment timing
8. Fraud Risk Keeps You Up at Night
The Warning Sign: Weak controls and largely paper-based processes.
Manual AP processes create security gaps that fraudsters exploit. Paper checks remain particularly vulnerable to fraud. Well-designed automated systems include controls that significantly reduce these risks.
Example: A company with limited approval controls discovered an employee had created fake vendor accounts. The fraudulent payments totaled $67,000 over eight months. An automated system would have flagged this immediately.
9. Vendor Management Is Reactive, Not Strategic
The Warning Sign: AP staff spending excessive time answering payment inquiries.
Did you know that AP staff typically spend 19.3% of their time responding to supplier inquiries? That's nearly a full day each week addressing questions that self-service portals could handle automatically.
This prevents your team from adding value through strategic financial work.
10. Your AP Team Is Burning Out
The Warning Sign: High turnover and staff frustration with repetitive manual tasks.
Your accounting staff represents a valuable resource. Many spend their days on manual data entry instead of contributing to strategic financial management.
The average AP department processes only 32.4% of invoices straight-through without manual intervention, while top performers achieve 48.9%.
This inefficiency creates additional costs through:
Higher recruitment and training expenses
Lost institutional knowledge
Decreased team morale
Missed opportunities for strategic contributions
The Path Forward: AP Automation
AP automation systematically eliminates these inefficiencies we’ve discussed, delivering remarkable results:
79.5% lower processing costs
81% faster processing times (3.4 days vs. 10.1 days)
60% fewer exceptions
2.15x higher rate of straight-through processing
Taking the Next Step
Smart finance leaders recognize that modernizing AP transforms a back-office function into a strategic asset that contributes to the company's financial health.
At Corpay, we've helped thousands of companies across industries automate their AP processes. Our clients typically see rapid returns on their investment, with benefits that continue to compound year after year.
Ready to stop the unnecessary expense and turn your AP department into a strategic advantage?