Big businesses know how much it costs them to process an invoice, down the penny. Small businesses may have a rough idea or often none at all. This is a powerful advantage that lets them root out inefficiencies, while you lose money on wasteful processes.
Fortunately, the ability to optimize is within easy reach of every business owner. If you’re interested in increasing the efficiency of your operations, here is how you can identify costs and reduce your spending.
First, look at your direct costs
Direct costs are the amount of money it takes to create, send, and close an invoice: paper, ink, postage, etc. It also includes the price of any accounting software you use, such as QuickBooks, FreshBooks, or Xero. If you rely on paper invoices, there are also storage costs to consider.
These types of invoicing costs tend to be small at first, meaning they grow rapidly as your business expands and you begin to process a higher number of invoices. But it’s not until you examine the indirect costs that you really know what you’re up against.
Next, consider your indirect costs
Indirect costs are hard to see but can hurt your business. They steal your time, without a doubt your most valuable asset. Ask yourself:
- How much time do I spend writing an invoice?
- How much time do I spend reviewing an invoice?
- When I find an error, how much time do I spend tracking down and correcting it?
- When the invoice is written, how much time do I spend printing and mailing them?
Most of the time spent processing invoices gets swallowed up on routine, repetitive tasks like reconciliation. They’re an essential part of the process, but they don’t contribute much to the bottom line. Worse, they require the expertise of a team member who could be applying their skills in a more valuable way.
As a small business owner, you rely on employees to wear multiple hats. One day you need them in sales. Next, you need them to check inventory or update your website. Businesses like yours need to be flexible to handle the challenges coming in.
Manual invoice processing robs you of that agility. If one employee has to spend their day crunching numbers, that’s someone who can’t help you deliver greater value to customers. Remember, your expertise is valuable. Your time is valuable. Your team is valuable. Hours lost to inefficient invoicing is money out of your pocket.
The good news is there’s an easy way to reduce invoice processing costs
Chargezoom simplifies the whole payment process. Our software connects your payment and accounting systems, allowing us to reconcile payments in real-time. There’s no paperwork or CSV files. No need for manual data entry either. We do all the heavy lifting. With nothing tying down your or your team, spending drops precipitously while productivity rises overnight.