How to estimate the cost of manual invoice data entry
Measure the time your team spends collecting, entering, checking and correcting invoices, then multiply those hours by a stated hourly cost. Compare that with the review time and software cost in a pilot. Keep late-payment charges, missed discounts and borrowing costs separate unless you can show that invoice handling caused them.
Can time saved be counted as money saved?
Time released creates capacity. It becomes a cash saving only if it reduces paid hours or another real expense. Report the two separately.
Measure the work around the invoice
The bookkeeping fee includes more than entering bills. Reconciliation, answering client questions, preparing reports and choosing the correct accounting treatment may remain even after capture is automated. Start by measuring invoice handling on its own.
For one ordinary working period, record each task against the document or batch that caused it. Count hands-on time, not the time a file spends waiting in a queue. Record waiting time separately if you also want to understand reporting delays.
| Work to measure | What belongs in it |
|---|---|
| Collection | Downloading attachments, filing documents and chasing a missing invoice. |
| Entry | Typing invoice fields and recreating lines. |
| Coding and review | Choosing accounts, checking tax treatment and checking the entered record. |
| Correction | Finding and repairing errors discovered after entry. |
| Retrieval | Finding source documents in response to a later query. |
Give each block of time one category. If a missing invoice takes 15 minutes to find during reconciliation, count those 15 minutes once. Do not also add them to collection, year-end queries and general finance interruptions.
A worked estimate with stated assumptions
of monthly capacity released
12 hours of handling becomes 6 in this example.- £120 per month
- Value of released time after the illustrative software cost. This is not automatically a cash saving.
- £120 once
- Four hours of setup at £30 an hour use the first month's calculated benefit.
Example inputs: 150 invoices a month, £30 per hour and £60 a month for software.
See the calculation and assumptions
This example is a calculation, not a benchmark for UK businesses. Replace every input with your own measured values. It assumes 150 invoices a month and an hourly cost of £30.
| Monthly work | Current process | Pilot process |
|---|---|---|
| Collection and entry | 3 minutes × 150 = 7.5 hours | 1 minute × 150 = 2.5 hours |
| Review | 1 minute × 150 = 2.5 hours | 1 minute × 150 = 2.5 hours |
| Correction and retrieval | 2 hours | 1 hour |
| Total handling time | 12 hours | 6 hours |
| Time valued at £30/hour | £360 | £180 |
The example releases six hours a month, valued at £180. If the software costs £60 a month in this example, the difference is £120 a month before setup and training. The £60 is an illustrative input, not a Datamolino price. Use the relevant current plan and your actual document volume in a purchase decision.
If configuration takes four hours at the same hourly cost, setup adds £120. In this scenario, the first month's calculated benefit is used by setup. A salaried team may still pay the same wages while using those six hours for other work.
Keep cash-flow costs in a separate calculation
A late bill may result from a missing invoice, an unresolved dispute, an approval delay or insufficient cash. Capture software can change the first part of that process. It cannot establish which cause produced a particular charge.
List actual late charges, missed contractual discounts and duplicate payments separately. For each, record the cause and whether the proposed process would have changed it. A refunded duplicate payment is different from a permanent loss. An earlier view of unpaid bills may help cash planning without producing a measurable reduction in borrowing.
Measure the same work during a pilot
Datamolino can receive documents through a folder email address, capture invoice detail and apply saved coding decisions. Description matching repeats the coding from the last exported matching line for the same supplier; keyword rules cover descriptions with changing dates or references. The line automation guide explains that distinction.
- Choose a representative set of suppliers and document types.
- Record setup time separately from processing time.
- Keep the review standard the same in both processes.
- Include corrections and queries discovered after export.
- Compare ordinary recurring invoices with new or unusual cases.
Report what actually changed
Use the bookkeeping automation guide to decide which tasks to test. At the end, report the measured hours released, the remaining work and the net cost. Those figures give the person buying the software something they can check.
What should the sample include?
Include simple recurring bills, invoices with many lines, scans, new suppliers and documents that need correction. A sample of only clean PDFs will understate the work.
