Organizational Cost for AP Automation Solutions

When determining the cost to an organization for an AP Automation Solution, there are a number of price points to consider. The following will help you determine and evaluate all of the costs for automating your AP function. This will, of course, vary as solutions have both fixed and variable pricing components.

• Initial cost (fixed) of the AP Automation Solution - can include a 1-time set-up fee

• Initial cost (fixed) of a pre-built integration Solution to connect  - can include a 1-time set-up fee

• Annual cost (fixed) of the AP Automation Solution

• Annual cost (fixed) of the Integration Solution - may have tiers based on the frequency the integration runs

• Variable cost (time and materials) of the AP Automation Solution provider

• Variable cost (time and materials) of the Integration provider

• Variable cost per invoice processed by the AP Automation Solution provider

• Variable cost per check payment made by the AP Automation Solution provider

• Variable cost per electronic payment (EFT) made by the AP Automation Solution provider - may vary or be only for international payments 

• Variable cost of writing a custom integration to the ERP if a pre-built solution is not identified and selected

• Internal costs or contracted consultant, such as project manager for the software/partner selection, project manager for the implementation and staff time for testing and training

This seems like a long list, but this is encompassing of all possible costs.  In reality, an identified solution will consist of only a portion of these costs based on the costing models of the providers and the requirements of the business.  I am in the process of advising a client right now on a fully integrated solution with cost model that includes only a 1-time set-up fee, a flat recurring annual fee, and a cost per check payment.  

The costs above, balanced against the removed costs of internally processing invoices and payments, paper stock, postage, and bank fees, provides the information needed for a business to evaluate the ROI when considering an AP Automation solution. My observation on the ROI of such a solution is that cost of the AP Automation solution has a 2.5x return to the business based on the time and expense associated with manually processing invoices and payments. 

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