Understanding the return on investment (ROI) of accounts payable automation is critical for finance leaders evaluating whether to modernize their AP processes. AP automation ROI measures the financial gains your organization achieves by replacing manual invoice processing with automated workflows, relative to implementation and maintenance costs. According to a comprehensive Forrester study on Basware AP Automation, companies achieve an average 158% ROI over three years with payback in just six months. This guide breaks down these findings and shows you how to calculate your own AP automation ROI.
Forrester recently set out to answer that question, conducting an insightful and enlightening study on the Total Economic Impact of Basware AP Automation. After the release of the report, Forrester and Basware hosted a webinar to discuss the results of the study and what it means for companies around the world.
Here are a few key takeaways:
What's Top-of-Mind for Finance Leaders—And How It Impacts ROI
- AI and machine learning capabilities:Modern AP automation leverages artificial intelligence to generate faster, more accurate forecasts and fuel data-driven decision-making across organizations. These AI-powered solutions improve ROI by reducing the time finance teams spend on manual analysis and improving forecast accuracy.
- Fraud prevention:External fraud poses significant financial risk. Automation helps prevent fraud through enhanced controls and pattern recognition, protecting the bottom line and contributing to overall ROI through avoided losses.
- AP team productivity:As the Forrester study shows, Basware customers experienced a 50% productivity increase among AP clerks. This efficiency gain is one of the largest contributors to positive ROI, allowing organizations to handle higher invoice volumes without increasing headcount.
- Workforce retention:Younger employees increasingly expect modern, efficient tools. AP automation improves job satisfaction by eliminating tedious manual tasks, reducing costly turnover in finance departments.
- Working capital optimization: Strategic payment timing and improved visibility into cash positions help organizations optimize their working capital, creating additional financial value beyond simple cost savings.
Today's finance leaders are focused on several key areas that directly influence AP automation ROI:
The Rise of E-Invoicing Mandates and ROI Implications
By 2028, all European member states will be required to implement e-invoice mandates for invoices directed to public administration and other businesses. This regulatory shift has important ROI implications:
- Compliance cost avoidance: Organizations that implement AP automation now avoid the risk of penalties and last-minute implementation costs
- Future-proofing investment: Automation infrastructure deployed today will accommodate e-invoicing requirements, maximizing long-term ROI
- Competitive advantage: Early adopters gain operational advantages over competitors still relying on paper-based processes
Companies must prepare now by implementing the necessary technology to manage these changes and meet marketplace demands. Organizations that wait face compressed implementation timelines and potentially higher costs, reducing their overall ROI.
Key Factors That Influence Your AP Automation ROI
Multiple variables determine the ROI your organization will achieve from AP automation. Understanding these factors helps set realistic expectations and maximize returns.
- Invoice Volume and Processing Costs: Organizations processing higher invoice volumes typically see greater absolute savings. If you're spending $10-$20 per invoice on manual processing (industry average), automation can reduce this to $3-$5 per invoice. The Forrester study found Basware customers achieved a 50% productivity improvement, directly reducing processing costs.
- Current Error Rates: Manual AP processes are prone to errors—duplicate payments, incorrect data entry, and late payments all carry costs. Automated validation and matching reduce error rates by up to 90%, with savings ranging from thousands to millions of dollars annually depending on organization size.
- Early Payment Discount Capture: Many suppliers offer 1-2% discounts for early payment. Manual processes often miss these opportunities due to processing delays. Automation enables organizations to consistently capture these discounts, adding directly to bottom-line savings.
- Fraud Prevention: AP fraud costs U.S. businesses billions annually. Automated systems with enhanced controls, duplicate detection, and approval workflows significantly reduce fraud risk. Even preventing a single large fraudulent payment can justify automation investment.
- Compliance Requirements: As e-invoicing mandates roll out globally, automation helps organizations meet regulatory requirements while avoiding penalties. Audit trail capabilities also reduce compliance costs during financial audits.
- Staff Retention and Satisfaction: Forrester's research indicates that improving workforce retention is a key priority for finance leaders. Automation reduces tedious manual work, improving job satisfaction and reducing costly turnover in AP departments.
- Working Capital Optimization : Better visibility into payment obligations and cash positions enables strategic payment timing, improving working capital management. The 84% of companies prioritizing automation in the next 24 months recognize these strategic benefits extend beyond simple cost reduction.
Beyond the Numbers: Strategic Benefits of AP Automation
- Beyond the Numbers Strategic Benefits of AP Automation: While the 158% three-year ROI is compelling, AP automation delivers strategic advantages that strengthen your entire organization.
- Enhanced Decision-Making: Real-time visibility into payables and cash flow enables finance leaders to make data-driven decisions faster. AI and machine learning capabilities provide more accurate forecasting, reducing the risk of cash flow surprises.
- Stronger Vendor Relationships: Consistent, on-time payments build supplier trust and may lead to preferential treatment, better terms, or priority during supply shortages. In today's complex supply chains, these relationship benefits can be as valuable as direct cost savings.
- Scalability Without Headcount Growth: As your organization grows, automation enables your AP team to handle increasing invoice volumes without proportional staff increases. This scalability protects margins during expansion.
- Risk Mitigation: Enhanced audit trails, automated controls, and systematic approval workflows reduce both fraud risk and compliance violations. In an increasingly regulated environment, these protections become more valuable over time.
- Competitive Advantage: The Forrester study shows 84% of companies plan to prioritize automation in the next 24 months. Early adopters gain advantages over competitors still managing manual processes, from operational efficiency to supplier relationship strength.
Data trends and the ROI of AP automation
Forrester’s research revealed some fascinating statistics. First, 84% of companies will prioritize automation in the next 24 months. Companies that have already incorporated Basware’s AP Automation into their businesses saw a 50% increase in productivity among AP clerks. And over the course of three years, they experienced a 158% return on investment, with a payback period of just six months.
Breaking Down the 158% Three-Year ROI
Forrester's Total Economic Impact study revealed that Basware customers achieved a 158% ROI over three years with a six-month payback period. This impressive return stems from multiple sources:
- Labor cost reduction: 50% increase in AP clerk productivity through elimination of manual data entry and automated invoice matching
- Error prevention savings: Significant reduction in duplicate payments, late payment penalties, and incorrect data entries
- Early payment discount capture: Faster processing enables organizations to take advantage of vendor early payment terms
- Working capital optimization: Improved cash flow management and payment scheduling
- Reduced fraud risk: Enhanced controls and audit trails minimize costly payment fraud incidents
These findings align with broader industry data showing that automated AP costs are only 33% of manual processing costs, primarily due to reduced labor expenses and error correction.
If you’d like to explore more of the insights discussed in this webinar, watch it on demand any time here. You can also download the study conducted in partnership with Forrester here.
How to Calculate AP Automation ROI for Your Organization
While Basware customers achieve an average 158% three-year ROI, your specific returns will depend on your current AP process costs and automation benefits. Here's a framework to calculate your potential ROI:
The Basic ROI Formula: ROI (%) = [(Total Benefits - Total Costs) / Total Costs] × 100
Step 1: Calculate Your Current AP Processing Costs
Start by documenting your existing manual AP expenses:
- Labor costs (staff time × hourly rate for data entry, invoice matching, approval routing, and exception handling)
- Paper-based costs (printing, postage, physical storage)
- Error correction costs (duplicate payments, late fees, supplier disputes)
- Lost early payment discounts
- Fraud losses
Example: If you process 10,000 invoices annually at $15 per invoice in labor and materials, your current cost is $150,000 per year.
Step 2: Estimate Post-Automation Costs
Determine your investment in AP automation:
- Software subscription or licensing fees
- Implementation costs (integration, configuration, training)
- Ongoing maintenance and support
- Reduced labor costs (accounting for productivity gains)
Example: Software and implementation costs of $60,000 in year one, with reduced processing costs of $50,000 annually (reflecting the 50% productivity improvement observed in the Forrester study).
Step 3: Calculate Net Savings
Net Savings = Current Costs - Post-Automation Costs Example: $150,000 - $50,000 = $100,000 annual savings
Step 4: Apply the ROI Formula
ROI = [($100,000 - $60,000) / $60,000] × 100 = 67% first-year ROI
As the Forrester study demonstrates, ROI typically increases significantly in years two and three as implementation costs are absorbed and efficiency gains compound, reaching the 158% three-year average for Basware customers.
Ready to calculate your specific ROI? Find out your total benefits now with our business case calculator.