How Much Does It Cost to Process a Purchase Order?
Cut PO processing costs with automation. Discover hidden expenses and how tools like Buddy streamline wholesale fulfillment for growing CPG brands.
Order fulfillment is the backbone of wholesale. If you're a CPG brand selling to retailers, every purchase order kicks off a high-stakes chain of events - confirming details, shipping product, issuing invoices and getting paid. It’s not just about moving boxes. It's about making sure nothing gets lost in the shuffle.
But here’s the problem: most teams don’t have a clear handle on what it actually costs to process a purchase order. Manual workflows, scattered communication and patchwork systems hide the true expense. And those hidden costs add up fast.
If you run finance or sales operations at a growing brand, this post is for you. We’ll break down what really goes into invoice and PO processing, where the hidden costs hide and how automation can help you get control without hiring a bigger team.
What Drives the Cost of Processing a PO
Labor Costs
Labor is your biggest variable. AP clerks, accounting assistants or operations staff typically earn $25–40/hour. Each PO might take 20–50 minutes depending on complexity. That’s $8–33 in labor per order. With 200 POs a month, that adds up fast.
Manual Data Entry and Review
Creating invoices in accounting systems, adding records to spreadsheet trackers and inputting order data into ERP systems add friction. Typing mistakes, mis-entered SKUs, wrong prices. You burn time chasing issues. More complex orders or more complex invoices take even longer.
Approval Workflow Delays
Email chains or shared spreadsheets slow you down. The approval workflow consumes hours of back-and-forth. Longer delays cost cash flow and increase the risk of mistakes slipping through.
Hidden Costs and Opportunity Cost
There are hidden costs in context switching, idle time waiting for approvers or fixing mistakes. Not to mention the opportunity cost: valuable time that could go toward analytics, sales or brand development.
Transaction and Banking Fees
If you invoice via certain accounting platforms or marketplace, you may incur transaction fees or commission. These don’t seem huge per order but over hundreds of POs they add up.
Calculating the Average PO or Invoice Processing Cost
Sample Time Breakdown
Data entry: 10 minutes
Approval routing: 5 minutes
Issue resolution or follow-up: 10-20 minutes
Invoice generation and filing: 5 minutes
Total: 30+ minutes per order
Sample Cost Calculation
100 POs/month × 30 minutes = 59 hours/month
At $35/hour, labor = $2,065 per month, or nearly $25,000 per year
Now layer on other factors:
Corrections and issue resolution: add 20% overhead (~17 hours/month)
Late payment fees or lost discounts: conservatively $500/month
Infrastructure or ERP maintenance: $200/month share
Transaction fees: $100/month
Total cost per month: about $3,500 (~$42,000/year). That works out to $35 per PO.
Industry Benchmarks
Studies show PO processing costs vary: small businesses may spend $15–30 per PO. Larger firms often exceed $40 per PO, especially if manual invoice processing predominates.
Your own cost depends on number of POs, team size and how cluttered your processes are.
Why PO Processing Costs Scale With Growth
More POs, More Complexity
As you sign on more retail partners or expand your SKUs, the volume of orders increases. Promotional periods or seasonal spikes drive PO costs even higher per order due to complexity.
More People, More Errors
Adding headcount isn’t a scalable solution. More staff workflows mean more miscommunication, more chance for duplicate payments and delays in approval process.
New Stores and Order Formats
Integrating EDI, portal-based orders or international suppliers introduces new formats. That means new rules and more room for error and more variable costs.
How Automation Changes the Equation
From Manual to Automated Invoice Processing
With AP automation, you can capture POs and invoices from email, PDF or EDI without manual typing. Systems extract SKU, quantity, terms and customer data automatically. That drastically cuts invoice processing time.
Streamlined Approval Workflows
Automated systems route invoices for approval. Approvers see content in context with a click. No more long email trails or forgotten line items. Every action is visible and auditable.
One-click Invoice Creation and Payment
Once a PO is approved, the system can generate the invoice, issue payment (including early payment discounts) and sync data to your accounting software or ERP.
Fast Reconciliation and Fewer Errors
Because invoice data comes from the original PO or order confirmation, accuracy improves. That means fewer disputes, fewer chargebacks and fewer duplicate payments.
Real Example: Hempress Hygienics
Before using Buddy, the founder of Hempress Hygienics was spending 45 minutes per order just to process wholesale POs. That meant downloading attachments, copying order details into Google Sheets, creating invoices in QuickBooks, building packing lists, uploading files to the 3PL, and emailing confirmations.
Once they switched to Buddy, order entry time dropped by 75%. Buddy automatically parsed PO details from email and EDI, generated invoices in QuickBooks, and synced fulfillment data. Instead of chasing paperwork, the founder can now focus on sales and growth.
What to Look for in an Automation Tool (like Buddy)
Handles Every Format
Buddy works with email attachments, PDF, EDI and manual uploads. It removes the guesswork about whether a PO can be parsed.
Syncs With Your Systems
Integrates with QuickBooks, Shopify, ERP systems, Gmail, Slack and more. That avoids siloed manual entry or data mismatches.
Fast Setup, Minimal IT Lift
You don’t need a team of developers. Buddy has a lightweight setup with no heavy infrastructure costs or months of vendor training.
Transparent Pricing
Look for flat per-order pricing or seat-based models. Avoid usage-gated tools that charge extra for features after onboarding.
Calculating Your ROI With Automation
Reduced Labor Costs
Say automation cuts processing time from 25 minutes to 5 minutes per PO. That’s 80% reduction. At 200 POs/month, you’d move from 83 hours to 17 hours. At $30/hour, labor drops from $2,490 to $510, saving $1,980/month.
Fewer Errors and Fewer Fees
Better data accuracy means fewer disputes, late charges and lost discounts. Suppose those hidden costs shrink from $600/month to $150, saving $450/month.
Qualitative Gains in Cash Flow and Capacity
You speed turnaround, free up your finance team for growth tasks and enable early payment discounts. That yields cash flow benefits that add up.
Combined, you can easily unlock 40–60% cost savings and still scale order volume without hiring more people.
Factors That Influence Your Own Cost
Here are variables that affect your average cost to process a PO:
Invoice complexity: larger orders, promotions or bundles take longer
Approval layers: more approvers or manual red-flags slow you down
Format diversity: EDI vs paper vs email attachments
Tooling: spreadsheet vs ERP vs automation
Volume: high volume smooths out fixed costs but multiplies variable costs
Your team’s wage rates: labor costs differ depending on team size and location
Common Traps: Where Hidden Expenses Hide
Paper Invoices and Manual Methods Are Expensive
If you're still handling paper orders, you're paying for printing, filing, scanning and organizing.
Duplicate Payments
Manual tracking leads to paying the same invoice twice. Remember the CMOs who lose 1–2% of spend to duplicate payments?
Late Fees & Dispute Resolution
Late payment triggers fees. Vendors dispute short pays and net terms issues, all costing admin time.
Steps to Reduce Costs & Improve Process
Track Your Current Cost
Log how much time your team spends on each step of PO processing. Include error resolution and email back and forth.Identify Manual Work streams
Where is manual data entry happening? Which formats cause the most friction?Calculate Real Labor & Admin Costs
Factor in staff wages, overtime and spreadsheet reshuffles.Estimate Duplicate Payments, Fees & Losses
Review past reconciliations and vendor statements.Pilot Automation
Try Buddy or similar tools. Automatically parse orders, route approvals, generate invoices and sync accounting.Measure Savings
Compare cost per PO before and after. Track labor saved, errors eliminated and discounts captured.Aim for Continuous Improvement
Once automation is in place, refine your approval process, reorder rules and workflows to optimize throughput.
Conclusion
Manual PO processing costs more than most teams realize. Even at a conservative $10–25 per order, the hidden costs—errors, delays, late fees and infrastructure overhead—can push the total far higher. If you're processing 200 POs a month, it's easy to spend $30K–$40K per year just keeping up. And as order volume grows, those costs only multiply.
Automation changes the math. By cutting down data entry, streamlining approvals and syncing systems, tools like Buddy help you lower labor costs, reduce mistakes and speed up cash flow.
You don’t need a bigger team to scale. Just a smarter system. Understanding your true cost is the first step. Automating the process is how you take control.
FAQ
What is the average cost to process a purchase order?
The average cost to process a purchase order ranges from $15 to $40 per order, depending on order complexity, team size and how manual your workflows are. For brands using spreadsheets or email, costs climb quickly because of labor, errors and delays.
Why does purchase order processing take so long?
Manual PO processing takes time because it involves data entry, approvals, invoicing and follow-ups, often across disconnected tools. Each step adds friction, especially when you're dealing with PDFs, email attachments or EDI formats.
How can I reduce the cost of PO and invoice processing?
You can reduce PO and invoice processing costs by automating order capture, approval routing and invoice generation. Tools like Buddy cut manual work by 75 percent, helping lean teams save thousands in labor and avoid late fees or duplicate payments.
What are the hidden costs of manual PO workflows?
Hidden costs include duplicate payments, missed early payment discounts, ERP maintenance and admin time spent resolving errors. These costs often go unnoticed but can add up to tens of thousands of dollars per year.
How does automation improve wholesale order fulfillment?
Automation improves wholesale fulfillment by eliminating manual data entry, streamlining approvals, syncing systems like QuickBooks and Shopify and reducing errors. It speeds up invoicing, improves cash flow and lets small teams handle more volume without hiring.
