While so many business systems have moved to electronic and online methods, there are still many companies that utilize paper invoices, paper-based billing systems, along with paper-based payment processing. Many companies around the globe are choosing to stick with paper-based billing methods, because that’s historically what has worked for them. Why change it if it works? If you haven’t done so already, you might also be interested in our invoice type comparisons page for a list of different invoice types.
It is important to note that paper-based billing and invoicing is quite expensive when you think about it. Each person that handles all of the paperwork and invoices must be paid, and all of the supplies surrounding it – including paper, printer, ink, stamps, shipping, labels, and packing – all must be purchased.
Paper-based invoicing and billing also takes longer to process than that of electronic invoicing and billing. As they say, time is money! There are also often bank fees associated with paper billing.
Because of the time it takes to create, process, and send a paper invoice, studies have estimated that a single paper invoice costs a business nearly $15 (and sometimes up to $30) to complete! Because of this, many companies have made the change to electronic systems in order to cut costs and speed up the billing process.
Here are all of the factors that go into paper-based billing and invoicing:
- Invoice file preparation and printing
- Paper invoices and bills
- Printing ink and cartridge refills
- Postage and shipping fees
- Offering payment options such as debit, credit, which have associated fees
- Customer service to handle calls and questions related to the invoices
- Accounting and reconciliation manpower
- Lost invoices and the time associated with this
- Undelivered bills and the time associated with this
- Any costs associated with bill storage
- Handling time for bill queries
Many of the costs listed above are considered indirect costs, and are often not considered when a business is completing their financial books. To put it simply, many companies spend a lot of time and money on paper invoices and billing. Some other hidden costs with paper invoicing may also include:
- Hidden payment transaction fees
- Invoicing or billing processing errors
- Bank overdraft costs
Of course, this all depends on a business’ size. A small business, for example, may not spend too much money sending invoices. But the bigger the company, the bigger the costs will likely be.
According to a survey completed by Sterling Commerce, each paper invoice error costs a company approximately $53 to fix. About half of the companies that use paper invoicing received audits, which cost them extra money in taxes and fines. The survey also found that companies who switched from paper invoices to electronic invoices saved 90 percent on billing costs, as well as a 37 percent reduction in errors.
Another thing to consider with paper invoicing is the green factor. Many companies like to boast the fact that they are taking all efforts to reduce their carbon footprint, and many people like to work with companies who are doing all they can to have less of an impact on the earth.
Paper invoicing uses a lot of paper, and as a result, it cuts down lots of trees, and utilizes other resources from the earth. If you want to make efforts to reduce the negative mark your company is leaving on the world, consider switching from paper invoices to electronic or online invoices.
If your business is stuck on paper invoicing and billing, know that the switch can be difficult at first, but the benefits will outweigh any negatives. For more information on electronic invoicing, check out our electronic invoice page, or visit our page on online invoicing here.