Here's a number that surprises most business owners: the average cost to manually process a single invoice is £15-£25. That includes the time spent receiving it, entering data, routing for approval, chasing approvers, matching to purchase orders, and posting to your accounting system.
For a business processing 200 invoices monthly, that's £3,000-£5,000 in hidden costs every single month. Over a year, you could hire another person for that money.
Yet most SMEs don't see this cost because it's buried in "how things work around here."
Where the Time Actually Goes
Let's trace a typical invoice through a typical UK SME:
Arrival and handling (3-5 minutes). Invoice arrives by email. Someone downloads the PDF, saves it to a folder, and forwards it to the right person. Already we've consumed time that adds zero value.
Data entry (5-8 minutes). The invoice details are typed into a spreadsheet, ERP system, or accounting software. Supplier name, invoice number, line items, amounts, due date. Keystroke by keystroke.
Approval routing (10-15 minutes of elapsed time). The invoice needs sign-off. It gets emailed to a manager who's in meetings all day. They'll get to it eventually. Maybe tomorrow. Maybe next week.
Chasing (5-10 minutes). The deadline approaches. Accounts payable sends a reminder. The manager finally approves. Or they're on holiday and nobody told AP.
Matching and posting (3-5 minutes). The approved invoice gets matched to a purchase order (if one exists), coded to the right nominal account, and posted to the system.
Filing (2-3 minutes). The paper copy (if there is one) goes in a folder. The digital copy gets saved somewhere findable. Hopefully.
Total: 30-50 minutes per invoice, spread across multiple people and days. That's where the £15-£25 comes from.
The Costs You Don't See
Processing time is only part of the story:
Late payment penalties add up when invoices sit in approval queues. That 2% penalty for paying after 30 days might seem small, but it compounds across your supplier base.
Missed early payment discounts are the same problem in reverse. Many suppliers offer 2-3% for payment within 10 days. If your process takes three weeks, you're never capturing that discount.
Duplicate payments happen more often than businesses admit. Without systematic matching, the same invoice gets processed twice. Recovering that money costs time and goodwill.
Supplier relationship damage from slow payment is real but hard to quantify. The suppliers who prioritise their fast-paying customers aren't prioritising you.
Audit and compliance risk from poor documentation creates exposure. If HMRC asks for evidence, can you find it quickly?
Staff frustration drives turnover. Nobody took an accounts role to chase approvers and enter data. The manual work is soul-destroying.
What Automation Looks Like
Modern invoice automation transforms the process:
Invoices arrive by email or supplier portal. The system recognises them as invoices automatically—no human handling required.
AI extracts the data. Supplier name, invoice number, amounts, line items, due date—all captured without manual entry. Accuracy rates exceed 95% for standard invoices.
Rules route for approval. Based on supplier, amount, cost centre, and other criteria, the invoice goes to the right approver automatically. Escalation triggers if approval is delayed.
Approvers act quickly. They get a mobile notification, see the invoice and relevant context, and approve with one tap. No searching through email.
Matching happens automatically. If there's a purchase order, the system matches invoice to PO and flags discrepancies. Three-way matching (PO, invoice, goods received) can be automated too.
Posted and filed. Approved invoices flow to your accounting system without rekeying. Digital copies are stored with full audit trail.
Total time: Under 5 minutes per invoice, most of it approval time rather than processing time. Cost: £3-£5 per invoice, often less.
The ROI Calculation
For a business processing 200 invoices monthly:
Current state: 200 invoices × £20 average cost = £4,000/month in processing After automation: 200 invoices × £4 average cost = £800/month in processing Monthly saving: £3,200 Annual saving: £38,400
Implementation costs vary, but most SME invoice automation projects run £8,000-£15,000 for setup and first-year licensing when working with a process automation consultancy or automation agency in London or across the UK. ROI is typically under six months.
That's before counting late payment penalties avoided, early payment discounts captured, and the value of your finance team focusing on analysis rather than data entry.
Getting Started
You don't need a massive ERP implementation to automate invoice processing. Tools like Dext, Lightyear, and Microsoft Power Automate can transform your process in weeks, not months.
The first step is understanding your current cost. Track invoices for a month. Count them. Time the process. Calculate your true cost per invoice.
That number will probably surprise you. And it will make the automation decision obvious.
Your team has better things to do than type invoice data into spreadsheets. Let them do it.