Is your business being “nibbled to death?” One of the more frustrating aspects of building value and reducing total cost of ownership (TCO) within your business is dealing with incremental costs created by process or technological deficiencies. Some incremental costs, like those associated with accounts payable (AP) processes such as invoice processing, are often seen as an unavoidable part of doing business.

But the true cost that comes with suboptimal invoice processing is lost value. Fortunately, you can break free from the obsolescence of manual processing with the right approach, processes, and tech. And in doing so, you can begin to shift not only invoices, but your entire AP and procurement functions toward building value rather than simply cutting costs.

Here's what you need to know about MSRP, sticker price, invoice, and other car-buying vocabulary basics. Understand These Pricing Terms to Get a Great Deal. By Ronald Montoya. March 8th, 2021.

  1. Generally speaking, the invoice price is what the dealer pays for the new cars on its lot. When a manufacturer ships a vehicle from the factory, the dealership is handed a bill (or an invoice).
  2. The invoice cost of a product is the price that the merchant pays for the product before marking it up to sell. The invoice cost is sometimes used in industries such as automobile sales to entice customers to buy. The net purchase cost of a product is the amount of the invoice plus any additional fees and taxes that are incurred.
  3. Invoice price (sometimes referred to as 'dealer cost') is the price that appears on the invoice that the manufacturer sends to the dealer when the dealer receives a car from the factory.

Why Invoice Processing Costs Matter

In addition to the costs associated with the goods and services for which they were issued, invoices can generate additional expense through error and delay. Consider this: if you’re still using manual invoice processing, you’re not alone; an estimated 90% of all invoices worldwide still are processed manually. But last-gen tech, along with paperwork piled on overworked staff, transform invoicing into a slow, laborious process that’s nibbling away at your bottom line with every passing second—especially if there’s an invoice exception or approval delay.

Worse yet? Those risks are just the beginning, since the data still has to be entered into your enterprise resource planning (ERP) software once it’s been approved for payment.

“Regardless of your company size or the number of invoices your AP team handles, manual invoice processing costs you more than it should in lost time, productivity, and wages.”

The Not-So-Mathmagical Costs of Manual Invoicing

Sadly, there’s no “magic number” for invoice processing costs; it depends on who’s doing the tabulating. Research firm Sterling Commerce puts the average cost of processing an individual invoice at between $12 and $30. Other firms narrow this gap to between $12.90 and $15. Some place it as high as $40.

The price, perhaps unsurprisingly, seems to be directly tied to both the complexity of your AP function and its relative efficiency—especially if you’re using automated invoice processing in addition to, or instead of, manual invoicing.

Regardless of your company size or the number of invoices your AP team handles, manual invoice processing costs you more than it should in lost time, productivity, and wages. Manual processing costs are taking a bite out of your bottom line through:

Direct Expenses

From paper and pens to postage and printer toner, physical invoices generate a lot of little expenses that add up fast. You’ll also need to pay storage costs, since paper invoices for both accounts receivable (AR) and AP need to be securely stored for auditing and reporting purposes. Add in shipping costs if you use a remote facility, and you might find yourself shelling out more to create and store an invoice than you did to pay it.

Indirect Expenses

These are the intangible costs of invoicing within the AR and AP process. After all, you need to pay someone to stuff envelopes and perform data entry, as well as track down errors and follow up on approvals. Every hour spent on invoices is one that can’t be devoted to more productive, higher-level tasks.

Hidden Costs

If indirect expenses are intangible, these costs are nigh on invisible—even if their impact isn’t. As its name implies, snail mail is slow, especially if you’re sending/receiving invoices, sending/receiving payment, and waiting for confirmation. In the meantime, you could easily tip into a negative cash flow situation and incur fees because you can’t pay other bills, or, for bills you’re paying on paper, rack up a late fee if the check takes a wrong turn in the post.

Errors only exacerbate the process, adding not only late fees and penalties, but more staff hours.

Calculating Your Costs

You can get a more precise estimate of your own manual invoicing costs by examining:

  • Total invoice processing time (including time in the post)
  • Total time spent reviewing invoices
  • Total time spent identifying and correcting data entry errors, duplicate payments, etc.
  • Storing and shipping costs for physical invoices
  • Discounts lost and penalties incurred due to late payments, errors, etc.
  • Total hours of labor spent by staff performing invoicing duties rather than their assigned functions.

Armed with this information, you can then calculate your own estimated costs of processing invoices by adding together staff costs, discounts lost, late fees, storage costs, and postal and shipping costs, and then dividing that amount by the total number of invoices processed to get the average cost of processing an invoice.

Automation to the Rescue

All of the headaches that come with manual invoice processing might make you want to throw your hands up and go back to the barter system. But you can cut your costs, and your frustration, without having to break out your merchant’s scales and stray livestock.

As of 2018, the American Productivity and Quality Center (APQC) reported that “top performers”—the top 25% of businesses evaluated—were spending an average of just $2.07 per invoice. Those in the bottom 25%, by comparison, spent nearly five times as much, with an average per-invoice processing cost of $10 or more. The difference? In large part, automation.

Modern purchasing software uses AP automation and artificial intelligence to stop invoices from devouring your time and money. Those thrifty top performers in APQC’s database help keep their invoicing costs low through their investments in automation.

AP automation trims costs and streamlines invoice management through:

  • Elimination of paper and postage costs. No more piles of paper. No more storage and shipping fees for box after box of documents.
  • Reduced labor costs. Your existing staff can focus on other priorities, and you don’t need to add staff just to handle paper invoices. Audits, both internal and external, are faster and more accurate.
  • Improved accuracy. Invoices are cross-matched to POs and shipping documents. Vendors are pre-vetted and information is always up-to-date and added automatically. Without the need for data entry across systems, human error is vastly reduced.
  • Faster approvals. Centralized communications and clearly defined roles, along with reminders to keep the process moving, mean fewer late fees and more early payment discounts.
  • Reduced fraud risk. Secured, centralized data, cross-checking, electronic invoicing and advanced vendor management mean no more rogue spending. Exposure to check and invoice fraud is greatly reduced thanks to built-in verification.
  • Greater productivity. Automation frees not only accounting, but management and other stakeholders from the need to micromanage invoicing tasks, creating more time for high-level tasks that support enterprise-wide goals while reducing stress.

The results can be impressive. Sterling Commerce reports that fully automated invoice processing can reduce per-invoice costs by nearly 90% while reducing errors by nearly 40%.

Trim the Fat From Your Invoice Processing Costs

Knowing the true cost of old-school invoicing is a strong motivator for change. Tap into the power of automation, and slice the value-draining stress, errors, and wasted time from your invoicing process. Your bottom line will thank you.

Save Time and Reduce Your Invoice Processing Costs With PLANERGY.

Find Out How

As prescribed in 1532.908, insert the following clause:

(a)Electronic invoicing and the Invoice Processing Platform (IPP) -

(1)Definitions. As used in this clause -

Contract financing payment and invoice payment are defined in Federal Acquisition Regulation (FAR) 32.001.

Electronic form means an automated system that transmits information electronically from the initiating system to all affected systems. Facsimile, email, and scanned documents are not acceptable electronic forms for submission of payment requests. However, scanned documents are acceptable when they are part of a submission of a payment request made using Invoice Processing Platform or another electronic form authorized by the Contracting Officer.

Payment request means any request for contract financing payment or invoice payment submitted by the Contractor under this contract.

(2)

(i) Except as provided in paragraph (c) of this clause, the Contractor shall submit invoices using the electronic invoicing program Invoice Processing Platform (IPP), which is a secure web-based service provided by the U.S. Treasury that more efficiently manages government invoicing.

(ii) Under this contract, the following documents are required to be submitted as an attachment to the IPP invoice: (This is a fill-in for acceptable types of required documentation, such as an SF 1034 and 1035, or an invoice/self-designed form on company letterhead that contains the required information.)

(iii) The Contractor's Government Business Point of Contact (as listed in System for Award Management (SAM)) will receive enrollment instructions via email from the IPP. The Contractor must register within 3 to 5 days of receipt of such email from IPP.

(iv) Contractor assistance with enrollment can be obtained by contacting the IPP Production Helpdesk via email at [email protected] or by telephone at (866) 973-3131.

(3) If the Contractor is unable to comply with the requirement to use IPP for submitting invoices for payment, the Contractor shall submit a waiver request in writing to the Contracting Officer. The Contractor may submit an invoice using other than IPP only when -

(i) The Contracting Officer administering the contract for payment has determined, in writing, that electronic submission would be unduly burdensome to the Contractor; and in such cases, the Contracting Officer shall modify the contract to include a copy of the Determination; or

(ii) When the Governmentwide commercial purchase card is used as the method of payment.

(4) The Contractor shall submit any non-electronic payment requests using the method or methods specified in Section G of the contract.

(5) In addition to the requirements of this clause, the Contractor shall meet the requirements of the appropriate payment clauses in this contract when submitting payment requests.

(6) Invoices submitted through IPP will be either rejected, or accepted and paid, in their entirety, and will not be paid on a partial basis.

(b)Invoice preparation. The Contractor shall prepare its invoice or request for contract financing payment in accordance with FAR 32.905 on the prescribed Government forms, or the Contractor may submit self-designed forms which contain the required information. Standard Form 1034, Public Voucher for Purchases and Services other than Personal, is prescribed for used by contractors to show the amount claimed for reimbursement. Standard Form 1035, Public Voucher for Purchases and Services other than Personal - Continuation Sheet, is prescribed for use to furnish the necessary supporting detail or additional information required by the Contracting Officer.

(c)Invoice content.

(1) The Contractor shall prepare a contract level invoice or request for contract financing payment in accordance with the invoice preparation instructions. If contract work is authorized by an individual task order or delivery order (TO/DO), the invoice or request for contract financing payment shall also include a summary of the current and cumulative amounts claimed by cost element for each TO/DO and for the contract total, as well as any supporting data for each TO/DO as identified in the instructions.

(2) The invoice or request for contract financing payment shall include current and cumulative charges by major cost element such as direct labor, overhead, travel, equipment, and other direct costs. For current costs, each major cost element shall include the appropriate supporting schedule identified in the invoice preparation instructions. Cumulative charges represent the net sum of current charges by cost element for the contract period.

(d)Subcontractor charges.

(1) The charges for subcontracts shall be further detailed in a supporting schedule showing the major cost elements for each subcontract.

(2) On a case-by-case basis, when needed to verify the reasonableness of subcontractor costs, the Contracting Officer may require that the contractor obtain from the subcontractor cost information in the detail set forth in paragraph (c)(2) of this section. This information should be obtained through a means which maintains subcontractor confidentiality (for example, via sealed envelopes), if the subcontractor expresses Confidential Business Information (CBI) concerns.

(e)Period of performance indication. Invoices or requests for contract financing payment must clearly indicate the period of performance for which payment is requested. Separate invoices or requests for contract financing payment are required for charges applicable to the base contract and each option period.

(f)Invoice submittal.

(1) Notwithstanding the provisions of the clause of this contract at FAR 52.216-7, Allowable Cost and Payment, invoices or requests for contract financing payment shall be submitted once per month unless there has been a demonstrated need and Contracting Officer approval for more frequent billings. When submitted on a monthly basis, the period covered by invoices or requests for contractor financing payments shall be the same as the period for monthly progress reports required under this contract.

(2) If the Contracting Officer allows submissions more frequently than monthly, one submittal each month shall have the same ending period of performance as the monthly progress report.

(3) Where cumulative amounts on the monthly progress report differ from the aggregate amounts claimed in the invoice(s) or request(s) for contract financing payments covering the same period, the contractor shall provide a reconciliation of the difference as part of the payment request.

(g)EPA Invoice Preparation Instructions - SF 1034. The information which a contractor is required to submit in its Standard Form 1034 is set forth as follows:

(1) U.S. Department, Bureau, or establishment and location - Insert the names and address of the servicing finance office, unless the contract specifically provides otherwise.

(2) Date Voucher Prepared - Insert date on which the public voucher is prepared and submitted.

(3) Contract/Delivery Order Number and Date - Insert the number and date of the contract and task order or delivery order, if applicable, under which reimbursement is claimed.

(4) Requisition Number and Date - Leave blank.

(5) Voucher Number - Insert the appropriate serial number of the voucher. A separate series of consecutive numbers, beginning with Number 1, shall be used by the contractor for each new contract. For an adjustment invoice, write “[invoice number] #Adj” at the voucher number. For a final invoice, put invoice number F. For a completion invoice, put invoice number #C.

(6) Schedule Number; Paid By; Date Invoice Received - Leave blank.

(7) Discount Terms - Enter terms of discount, if applicable.

(8) Payee's Account Number - This space may be used by the contractor to record the account or job number(s) assigned to the contract or may be left blank.

(9) Payee's Name and Address - Show the name of the contractor exactly as it appears in the contract and its correct address, except when an assignment has been made by the contractor, or the right to receive payment has been restricted, as in the case of an advance account. When the right to receive payment is restricted, the type of information to be shown in this space shall be furnished by the Contracting Officer.

(10) Shipped From; To; Weight Government B/L Number - Insert for supply contracts.

Car Invoice Cost

(11) Date of Delivery or Service - Show the month, day and year, beginning and ending dates of incurrence of costs claimed for reimbursement. Adjustments to costs for prior periods should identify the period applicable to their incurrence, e.g., revised provisional or final indirect cost rates, award fee, etc.

(12) Articles or Services - Insert the following: “For detail, see Standard Form 1035 total amount claimed transferred from Page _of Standard Form 1035.” Insert “COST REIMBURSABLE - PROVISIONAL PAYMENT” or “INDEFINITE QUANTITY/INDEFINITE DELIVERY - PROVISIONAL PAYMENT” on the Interim public vouchers. Insert “COST REIMBURSABLE - COMPLETION VOUCHER” or “INDEFINITE QUANTITY/INDEFINITE DELIVERY - COMPLETION VOUCHER” on the Completion public voucher. Insert “COST REIMBURSABLE - FINAL VOUCHER” or “INDEFINITE QUANTITY/INDEFINITE DELIVERY - FINAL VOUCHER” on the final public voucher. Insert the following certification, signed by an authorized official, on the face of the Standard Form 1034:

Invoice Cost Of 2020 Honda Accord Hybrid

“I certify that all payments requested are for appropriate purposes and in accordance with the agreements set forth in the contract.”

(13) Quantity; Unit Price - Insert for supply contracts.

(14) Amount - Insert the amount claimed for the period indicated in paragraph (g)(11) of this clause.

Invoice Cost Ford Fusion

(h)EPA Invoice Preparation Instructions - SF 1035. The information which a contractor is required to submit in its Standard Form 1035 is set forth as follows:

(1) U.S. Department, Bureau, or Establishment - Insert the name and address of the servicing finance office.

(2) Voucher Number - Insert the voucher number as shown on the Standard Form 1034.

(3) Schedule Number - Leave blank.

(4) Sheet Number - Insert the sheet number if more than one sheet is used in numerical sequence. Use as many sheets as necessary to show the information required.

(5) Number and Date of Order - Insert payee's name and address as in the Standard Form 1034.

(6) Articles or Services - Insert the contract number as in the Standard Form 1034.

(7) Amount - Insert the latest estimated cost, fee (fixed, base, or award, as applicable), total contract value, and amount and type of fee payable (as applicable).

(8) A summary of claimed current and cumulative costs and fee by major cost element - Include the rate(s) at which indirect costs are claimed and indicate the base of each by identifying the line of costs to which each is applied. The rates invoiced should be as specified in the contract or by a rate agreement negotiated by EPA's Cost and Rate Negotiation Team.

(9)Fee - The fee shall be determined in accordance with instructions appearing in the contract.

Note to paragraph (h) - Amounts claimed on vouchers must be based on records maintained by the contractor to show by major cost element the amounts claimed for reimbursement for each applicable contract. The records must be maintained based on the contractor's fiscal year and should include reconciliations of any differences between the costs incurred and amounts claimed for reimbursement. A memorandum record reconciling the total indirect cost(s) claimed should also be maintained.

(i)Supporting Schedules for Cost Reimbursement Contracts. The following backup information is required as an attachment to the invoice as shown by category of cost:

(1) Direct Labor - Identify the number of hours (by contractor labor category and total) and the total loaded direct labor hours billed for the period in the invoice.

(2) Indirect Cost Rates - Identify by cost center, the indirect cost rate, the period, and the cost base to which it is applied.

(3) Subcontracts - Identify the major cost elements for each subcontract.

(4) Other Direct Costs - When the cost for an individual cost (e.g., photocopying, material and supplies, telephone usage) exceeds $1,000 per the invoice period, provide a detailed explanation for that cost category.

(5) Contractor Acquired Equipment (if authorized by the contract) - Identify by item the quantities, unit prices, and total dollars billed.

(6) Contractor Acquired Software (if authorized by the contract) - Identify by item the quantities, unit prices, and total dollars billed.

(7) Travel - When travel costs exceed $2,000 per invoice period, identify by trip, the number of travelers, the duration of travel, the point of origin, destination, purpose of trip, transportation by unit price, per diem rates on daily basis and total dollars billed. Detailed reporting is not required for local travel. The manner of breakdown, e.g., task order/delivery order basis with/without separate program management, contract period will be specified in the contract instructions.

- Any costs requiring advance consent by the Contracting Officer will be considered improper and will be disallowed, if claimed prior to receipt of Contracting Officer consent. Include the total cost claimed for the current and cumulative-to-date periods. After the total amount claimed, provide summary dollar amounts disallowed on the contract as of the date of the invoice. Also include an explanation of the changes in cumulative costs disallowed by addressing each adjustment in terms of: Voucher number, date, dollar amount, source, and reason for the adjustment. Disallowed costs should be identified in unallowable accounts in the contractor's accounting system.

(j)Supporting Schedules for Time and Materials Contracts. The following backup information is required as an attachment to the invoice as shown by category of cost:

(1) Direct Labor - Identify the number of hours (by contractor labor category and total) and the total direct labor hours billed for the period of the invoice.

Rv dealer invoice cost

(2) Subcontracts - Identify the major cost elements for each subcontract.

(3) Other Direct Costs - When the cost for an individual cost (e.g., photocopying, material and supplies, telephone usage) exceeds $1,000 per the invoice period, provide a detailed explanation for that cost category.

(4) Indirect Cost Rates - Identify by cost center, the indirect cost rate, the period, and the cost base to which it is applied.

(5) Contractor Acquired Equipment - Identify by item the quantities, unit prices, and total dollars billed.

(6) Contractor Acquired Software - Identify by item the quantities, unit prices, and total dollars billed.

(7) Travel - When travel costs exceed $2,000 per invoice period, identify by trip, the number of travelers, the duration of travel, the point of origin, destination, purpose of trip, transportation by unit price, per diem rates on daily basis and total dollars billed. Detailed reporting is not required for local travel. The manner of breakdown, e.g., task order/delivery order basis with/without separate program management, contract period will be specified in the contract instructions.

- Any costs requiring advance consent by the Contracting Officer will be considered improper and will be disallowed, if claimed prior to receipt of Contracting Officer consent. Include the total cost claimed for the current and cumulative-to-date periods. After the total amount claimed, provide summary dollar amounts disallowed on the contract as of the date of the invoice. Also include an explanation of the changes in cumulative costs disallowed by addressing each adjustment in terms of: Voucher number, date, dollar amount, source, and reason for the adjustment. Disallowed costs should be identified in unallowable accounts in the contractor's accounting system.

(k)Adjustment vouchers. Adjustment vouchers should be submitted if finalized indirect rates were received but the rates are not for the entire period of performance. For example, the base period of performance is for a calendar year but your indirect rates are by fiscal year. Hence, only part of the base period can be adjusted for the applicable final indirect rates. These invoices should be annotated with “adj” after the invoice number.

(l)Final vouchers. Final Vouchers shall be submitted if finalized rates have been received for the entire period of performance. For example, the base period of performance is for a calendar year but your indirect rates are by fiscal year. You have received finalized rates for the entire base period that encompass both fiscal years that cover the base period. In accordance with FAR 52.216-7, these invoices shall be submitted within 60 days after settlement of final indirect cost rates. They should be annotated with the word “Final” or “F” after the invoice number. Due to system limitations, the invoice number cannot be more than 11 characters to include spaces.

(m)Completion vouchers. In accordance with FAR 52.216-7(d)(5), a completion voucher shall be submitted within 120 days (or longer if approved in writing by the Contracting Officer) after settlement of the final annual indirect cost rates for all years of a physically complete contract. The voucher shall reflect the settled amounts and rates. It shall include settled subcontract amounts and rates. The prime contractor is responsible for settling subcontractor amounts and rates included in the completion invoice. Since EPA's invoices must be on a period of performance basis, the contractor shall have a completion invoice for each year of the period of performance. This voucher must be submitted to the Contracting Officer for review and approval before final payment can be made on the contract. The Contracting Officer may request an audit of the completion vouchers before final payment is made. In addition, once approved, the Contracting Officer will request the appropriate closeout paperwork for the contract. For contracts separately invoiced by delivery or task order, provide a schedule showing final total costs claimed by delivery or task order and in total for the contract. In addition to the completion voucher, the contractor must submit the Contractor's Release; Assignee's Release, if applicable; the Contractor's Assignment of Refunds, Rebates, Credits and other Amounts; the Assignee's Assignment of Refunds, Rebates, Credits and other Amounts, if applicable; and the Contractor's Affidavit of Waiver of Lien, when required by the contract.

Alternate I (MAY 2019) As prescribed in 1532.908, substitute the following paragraphs (c)(1) and (2) for paragraphs (c)(1) and (2) if used in a non-commercial time and materials type contract:

(c)

(1) The Contractor shall prepare a contract level invoice or request for contract financing payment in accordance with the invoice preparation instructions. If contract work is authorized by individual task order or delivery order (TO/DO), the invoice or request for contract financing payment shall also include a summary of the current and cumulative amounts claimed by cost element for each TO/DO and for the contract total, as well as any supporting data for each TO/DO as identified in the instructions.

(2) The invoice or request for contract financing payment that employs a fixed rate feature shall include current and cumulative charges by contract labor category and by other major cost elements such as travel, equipment, and other direct costs. For current costs, each cost element shall include the appropriate supporting schedules identified in the invoice preparation instructions.

[85 FR 9395, Feb. 19, 2020]
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