Accounts payable cost savings: How much can you save?

Understanding the true cost of accounts payable (AP) is essential for finance leaders looking to drive efficiency and maximize ROI. This guide walks through:

• How to identify hidden AP costs
• Calculate the impact of automation
• Build a business case for change
• How Ramp Bill Pay saves finance teams an average of $400/month on transaction fees

Whether you’re evaluating new solutions or optimizing existing workflows, we’ll lay out practical steps to help you quantify savings and realize value at every stage of the AP process.

Why accounts payable cost savings matter

Accounts payable handles the end-to-end process of receiving, processing, and paying invoices from vendors and suppliers. Because AP costs are often distributed across departments and buried in manual work, many organizations underestimate their true financial impact.

Inefficiencies in AP can waste staff time, trigger late payment penalties, and cause missed discounts. Optimizing AP reduces these costs, improves cash flow, lowers risk, and positions your business for scalable growth as it expands. With a clear view of AP’s impact, you can make smarter decisions about where to invest in automation and process improvement.

The hidden costs of legacy AP software

Companies using legacy AP tools typically manage multiple platforms for their payables. One system handles invoice processing, another manages approvals, a third executes payments, and yet another handles reconciliation. Each platform brings its own costs, creating a complex web of expenses that's difficult to track.

Hidden AP costs appear in several forms:

• ACH transaction fees: These typically range from $0.20–$1.50 per transaction. For companies processing hundreds of payments monthly, this can still add up to significant costs.
• Seat-based software licensing: Charging for every team member who needs access creates bottlenecks. Companies often limit access to save money, forcing inefficient workarounds.
• Payment errors, late fees, and missed discounts: When systems lack proper controls or make approvals difficult, financial leakage happens regularly. Manual reconciliation increases the risk of duplicate payments or accounting errors that take time and money to fix.

These costs quickly exceed the base subscription price and managing disconnected systems also requires significant time. Finance teams spend hours on manual uploads, reconciling data across platforms, and tracking down approvals through email or chat. These tasks reduce productivity and increase labor costs, as teams grow just to manage complexity rather than adding strategic value.

How to assess your current AP costs

To get a complete picture of your AP costs, start by mapping your workflow from invoice receipt to payment. Track each touchpoint and approval stage to spot bottlenecks and redundancies. Then, break down your costs into visible and hidden categories for a thorough assessment.

Key cost components

• Calculate labor costs by tracking time spent processing invoices, routing approvals, executing payments, and handling vendor questions
• Measure error rates by counting duplicate payments, incorrect amounts, and misapplied accounting codes
• List all software expenses, including licenses, maintenance fees, and integration costs
• Document transaction fees for different payment methods and the time needed to match invoices with payments and purchase orders

Hidden costs

Beyond the obvious, review your payment history for late payment penalties and missed early payment discounts. Document manual workarounds your team uses to compensate for system gaps, and quantify the cost of storing paper records and retrieving documents for audits.

Cost breakdown table

Use the table below to organize your findings and calculate your total AP cost baseline:

By capturing both direct and indirect costs, you’ll have a solid foundation for measuring the impact of automation and identifying your biggest savings opportunities.

Calculating your AP automation ROI

Calculating ROI for AP automation helps you justify technology investments by showing the financial benefit relative to your spend. A positive ROI means your solution pays for itself and delivers ongoing savings. Here’s how to break down the calculation and apply it to your business.

Step 1: Use the core ROI formula

ROI = (Total Annual Savings – Annual Solution Cost) ÷ Annual Solution Cost × 100%

This tells you how much you’re gaining relative to what you’re spending on the automation platform.

Step 2: Estimate your total annual savings

Break savings into five major categories:

1. Processing cost reduction: (Old cost per invoice – New cost per invoice) × Annual invoice volume
2. Labor savings: (Hours saved per invoice × Hourly labor rate × Annual invoice volume)
3. Error reduction savings: (Reduction in error rate × Cost per error × Annual invoice volume)
4. Additional discounts captured: (% increase in early pay discounts × Eligible spend)
5. Penalty elimination: Eliminate recurring late fees or penalties tied to manual processing

Step 3: Add up the cost of your solution

Your annual solution cost should include:

• Annual software subscription or license fees
• Implementation and training (amortized over the system’s expected life)
• Ongoing maintenance and support costs

Example ROI walkthrough

Let’s walk through a simplified example for a finance team processing 6,000 invoices annually:

• Manual time per invoice: 15 minutes
• Labor rate: $35/hour
• Processing cost: $10 per invoice
• Error rate: 2% of invoices → $125 per error
• Late payment penalties: $3,000/year
• Early payment discount capture: 5% of $300K eligible spend

With AP automation, let’s say the software you’re adopting provides these benchmark improvements:

• Processing cost drops to: $3/invoice
• Labor drops by: 15 minutes per invoice
• Error rate drops to: 0.5%
• Discount capture increases by: 15%
• Penalties are eliminated
• Annual solution cost: $15,000/year in platform fees, along with $3,000/year for onboarding

Annual savings breakdown:

• Labor: (10/60 × $35 × 6,000) = $35,000
• Processing cost: ($10 - $3) × 6,000 = $42,000
• Error reduction: (1.5% × $125 × 6,000) = $11,250
• Additional discounts: (10% × $300,000) = $30,000
• Penalty elimination: $3,000

Total annual savings: $121,250

ROI = ($121,250 – $18,000) ÷ $18,000 × 100% = 573%

That means for every dollar this team spends, they save nearly six—through lower processing costs, fewer errors, reduced penalties, and improved discount capture.

How Ramp Bill Pay helps companies cut AP costs

Ramp Bill Pay is a leading accounts payable software that consolidates your AP process into a single, integrated suite. Everything from invoice intake and data extraction to approval workflows, payment execution, and accounting sync happens in one place. This means you can cut down on multiple software subscriptions and the integration costs that come with them.

Unlike legacy AP tools that require multiple software subscriptions—or charge extra for key features—Ramp includes everything finance teams need out of the box:

• Automated invoice capture and OCR
• Custom approval workflows with Slack integration
• Vendor onboarding and management
• Two-way syncing with leading accounting systems

That level of consolidation translates directly into cost savings. Companies save on software licensing, third-party integrations, and even per-payment transaction fees. And unlike some providers, Ramp doesn’t charge for accessing premium features or building approval logic that actually works for your business.

Ramp has already helped finance teams save up to:

• An average of $400/month on transaction fees
• $900/month on software costs
• $1,300/month on AP spend

When all your AP workflows live in one system, you don’t just move faster—you spend smarter.

Feature comparison: Ramp vs. typical legacy AP tools

Ramp offers powerful AP automation tools out of the box. The comparison below reflects what's included in Ramp's free plan, which already covers many features other tools charge for. For businesses with more advanced needs, Ramp also offers paid ($15/user/mo) and enterprise plans with additional capabilities.

How The Second City saved $40K annually with Ramp Bill Pay

Before Ramp, The Second City’s AP automation tool promised OCR and coding—but didn’t deliver. Bills had to be scanned, reviewed, and manually coded line by line in NetSuite, often with errors and missing data. The process was slow, unreliable, and expensive—costing the team $40,000 annually for software that didn’t work.

Ramp Bill Pay gave the team a real solution. With accurate OCR, line-item recognition, and automatic coding based on accounting rules, invoice entry became seamless. Vendor data was captured correctly, accounting rules were applied automatically, and payments flowed through without manual touchpoints.

This helped The Second City not only cut their bill processing time in half, but also help them save $40K annually by consolidating systems. For a lean team focused on reporting and analytics, the impact wasn’t just faster processing—it was time back to focus on higher-value work.

“Switching to Ramp for Bill Pay saved us not only time but also a significant amount of money. Our previous AP automation tool cost us around $40,000 per year, and it wasn’t even working properly. Ramp is far more functional, and we’re getting the benefits at a fraction of the cost,” says Frank Byers, Controller at The Second City.

Start saving smarter on AP

If your current AP setup feels expensive or fragmented, you’re not alone. Many finance teams discover they’re paying for multiple tools—while still dealing with slow approvals, manual entry, and limited visibility.

Ramp Bill Pay consolidates the entire AP process into one platform, helping teams save on software costs, transaction fees, and time spent on low-value tasks. Pricing starts with a free tier, with step-up plans from $15/user/month and custom options for enterprise teams.

Let’s help your team save time and money. Explore what smarter AP spend looks like with Ramp’s AP software.