Enter Processing Inputs
Example Data Table
| Invoice ID | Channel | Base Minutes | Approval Minutes | Exception | Rework | Estimated Unit Cost |
|---|---|---|---|---|---|---|
| INV-2401 | 6 | 2 | No | No | $3.41 | |
| INV-2402 | Portal | 5 | 1 | Yes | No | $5.12 |
| INV-2403 | EDI | 4 | 1 | No | No | $2.76 |
| INV-2404 | 7 | 2 | Yes | Yes | $6.38 | |
| INV-2405 | Scan | 8 | 3 | No | No | $4.07 |
Formula Used
(Monthly invoices × Base minutes per invoice) ÷ 60
(Monthly invoices × Approval minutes per invoice) ÷ 60
(Monthly invoices × Exception rate × Extra exception minutes) ÷ 60
(Monthly invoices × Rework rate × Rework minutes) ÷ 60
Total labor hours × Hourly labor rate
Direct labor cost + Overhead cost + Outsourcing cost + Fixed monthly costs
Gross monthly processing cost − Monthly discount savings
How to Use This Calculator
- Choose your preferred currency and enter monthly invoice volume.
- Add the average minutes needed for entry and approval work.
- Enter labor rate, overhead percentage, and any per invoice outsourcing fee.
- Estimate exception and rework frequency, then add the extra minutes each one creates.
- Include software, storage, other monthly expenses, and any savings from captured discounts.
- Set an optimization percentage to test a faster future-state workflow.
- Press Calculate Cost to view results above the form.
- Use the CSV and PDF buttons to export the calculated summary.
Frequently Asked Questions
1. What does this calculator measure?
It estimates the full monthly and annual cost of processing supplier invoices. The model includes labor, overhead, exceptions, rework, outsourcing, and fixed systems costs.
2. Why include approval minutes separately?
Approval time often belongs to different staff members and can quietly increase workload. Separating it gives a more realistic view of total effort consumed by every invoice.
3. What counts as an exception?
Exceptions are invoices that need extra handling, such as mismatched purchase orders, missing fields, tax issues, or supplier follow-up. They usually demand more time than standard processing.
4. How is rework different from exceptions?
Rework covers invoices that were processed but later needed correction. Examples include coding fixes, duplicate adjustments, wrong approvals, or incorrect amount changes after entry.
5. Should discount savings be entered as a positive number?
Yes. Enter expected monthly savings from early payment discounts or negotiated gains as a positive value. The calculator subtracts that amount from the gross monthly processing cost.
6. What does the optimization scenario show?
It applies your selected reduction percentage to time-based work. This helps you estimate how automation, better routing, or cleaner data could lower recurring processing cost.
7. Can I use this for shared service centers?
Yes. The model works for centralized finance teams, business units, and outsourced operations. Just use blended labor rates and combined monthly volumes for the group being analyzed.
8. Is cost per invoice enough for benchmarking?
No. Cost per invoice is useful, but you should also compare exception rate, rework rate, cycle time, and approval effort to understand why cost changes.