Today’s finance leaders are under pressure. Workloads are getting heavier, with over half of AP teams processing 5,000 or more invoices every month. Yet, they’re expected to keep pace with leaner teams and fewer resources. 

Many finance leaders are turning to technology to bridge the gap. But in an economic climate where every purchase is under scrutiny, many struggle with one thing: how to evaluate the ROI of financial tech. 

All too often, conversations about finance technology ROI are centered around one metric: labor savings. While this metric is important, it doesn’t tell the full story of a platform’s true impact. 

Understanding how to evaluate the ROI of finance tech requires a broader framework. In addition to measuring what you’ll save, it’s also important to consider what you’ll gain: speed, accuracy, fraud prevention, and the strategic capacity of your team.

But how can you calculate ROI in a way that truly reflects the full value? 

In this guide, we’ll walk through a step-by-step framework for evaluating the ROI of financial technology. We’ll explore how to calculate hard savings, quantify risk reduction, and build a business case that reflects the true value of your investment.

What is finance technology ROI? 

Finance technology ROI (return on investment) is a measure of the total value a software solution provides compared to its total cost. This factors in direct cost savings, such as reduced labor costs and late-payment fees, as well as indirect benefits, such as fewer errors, faster close cycles, lower risk of fraud, and more team bandwidth for higher-value work.

In theory, calculating finance technology ROI seems pretty straightforward. After all, it’s as simple as comparing the cost of the solution to the money it saves, right?

Not exactly. Why? Because finance technology often creates value in many ways, and they aren’t all easy to capture in a spreadsheet. 

Consider a business investing in an accounts payable automation platform that’ll dramatically reduce the amount of time staff spend on manual data entry and approval routing. Those labor savings are easy to quantify, and for that reason, they’re often the primary focus of a business case.

That same solution might also help the business make better decisions and have more time to focus on strategic work. Those gains are just as important, but they’re often left out of traditional ROI formulas.  

The benefits of investing in the right software solution typically fall into two buckets:

• Hard ROI: Direct, measurable financial gains including labor savings, lower processing costs, captured early-payment discounts, and fewer payment errors. 
• Soft ROI: Benefits that are harder to assign a dollar figure to, such as better visibility, faster decision-making, and more team capacity for strategic work. 

When it comes to evaluating finance tech ROI, finance leaders shouldn’t choose one metric over another. Instead, they must factor in both. 

By looking beyond measurable cost reductions, leadership gets a fuller picture of how a technology solution can impact efficiency, risk, and overall business performance. 

Why is finance tech ROI harder to measure than it seems? 

Most finance leaders know that automation can save time. But many struggle to measure the full financial impact of the problems automation solves. 

But why is that so?  

Tech ROI calculations often focus on the most obvious, measurable costs such as labor hours spent processing invoices or managing approvals. Yet they often overlook the less obvious costs created by manual finance workflows. 

And the truth is, there are many hidden costs. Some of the most common examples include:

• Duplicate invoices that slip through undetected.
• Payment delays which lead to late fees and negatively impact supplier relationships.
• Teams are spending valuable time investigating discrepancies, responding to vendor questions, and preparing for audits. 

On their own, each of these issues may seem minor. But collectively, they can cost organizations much more than the manual labor required to process transactions. 

Furthermore, many businesses fall into what could be considered a “piecemeal automation trap.” They automate certain parts of the AP process, while others remain manual. This all-too-common approach leaves organizations with a patchwork of disconnected tools and processes. Instead of eliminating work, this approach just moves it to another part of the process. 

Risk is another area that’s often overlooked. The cost of a duplicate payment, fraudulent invoice, or compliance issue isn’t always factored into ROI calculations. But they can have a major financial impact. Case in point? On average, Ottimate customers uncover $1.4M in duplicate invoice value per year thanks to purpose-built AI for AP. 

When you consider these factors, it’s easy to see why finance technology ROI is often harder to measure than it seems in theory. It isn’t as simple as running a quick labor savings calculation. Instead, finance leaders must also consider a whole host of hidden costs, risks, and inefficiencies that many brush off as inevitable.

A step-by-step framework for how to evaluate finance technology ROI 

Modern finance leaders must justify every technology investment. Yet many aren’t sure how to evaluate the ROI of financial technology in a way that reflects the true value a solution delivers. 

This six-step framework can help. It provides a straightforward approach for measuring ROI that factors in not only labor savings but also efficiency gains, risk reduction, and other long-term business benefits. 

Step 1: Baseline the costs of your current processes

Take a step back to determine the true costs of your current processes. Without establishing a baseline, it’ll be nearly impossible to measure the impact of your technology investments.

Start by documenting the metrics that have the biggest impact on efficiency, cost, and risk. Be sure to include: 

Cost per invoice processed

Calculate how much it currently costs your business to process a single invoice. Industry estimates often place this figure between $15 and $25 per invoice for businesses that rely on manual AP. However, actual costs vary widely based on volume, complexity, and process maturity. 

Hours spent on approvals, exception handling, and month-end close

Track how many hours the finance team spends managing approvals, resolving discrepancies, and closing the books. It’s likely more than you think. A recent survey found that more than half of teams spend six days or more closing the books each month. 

Payment error rates

Track how often errors such as duplicate and incorrect payments occur. Then, estimate how much time is spent investigating and correcting these errors. 

Late fees and missed early payment discounts

Review your recent payment history to determine how often you’ve incurred late fees and how much they’ve cost the business. Also, track how often you’ve missed opportunities to capture early-payment discounts, as well as the total value. 

Staff hours lost to fraud detection or duplicate investigation

Estimate how much time the finance team spends manually reviewing invoices to identify and address signs of fraud. 

Once you have a better picture of where time, money, and effort are being spent today, it’ll be easier to evaluate the potential return of your finance technology investment. 

Step 2: Define what “value” means for your organization 

Not all organizations measure success in the same way. For instance, a business just getting started with AP automation might be primarily focused on reducing the cost and effort of processing invoices. Another business that’s expanding to new locations may value the ability to scale processes without increasing headcount. 

So, before calculating ROI, define what success looks like for your business. You can think of it in terms of three categories:

1. Operational efficiency

These are improvements that help finance teams work faster, such as faster invoice processing, automated GL coding, and streamlined approvals. Often, these efficiency benefits directly translate into labor savings and productivity gains. 

For example, Ottimate processes invoices 80% faster with AI-powered GL coding. And VendorPay saves customers an average of $15,500 per year by catching duplicates and errors and cuts payment processing time from around 10 minutes to around one minute per payment. 

2. Financial risk reduction

Fintech may also deliver value by reducing potentially costly mistakes and strengthening controls. Some examples include duplicate invoice detection, fraud prevention, and automated audit trails. 

3. Strategic capacity 

Some of the AP automation benefits for finance teams are trickier to quantify. However, they’re still very important factors. For example, when finance teams spend less time on manual work, they have more time for analysis, forecasting, and other activities that support better decision-making and business growth. 

By defining value across all three of these areas, organizations can calculate a more complete, accurate ROI that isn’t based solely on labor savings. 

Step 3: Calculate hard (quantifiable) ROI 

Once you’ve calculated your current costs and defined what value means for your organization, it’s time to calculate the financial impact and ROI of accounts payable software.

Start with hard ROI, which includes benefits that can be quantified in dollars and cents. Here’s a simple framework for calculating it. 

Hard ROI = (Annual Cost Savings + Error/Fraud Reduction + Discount Capture) − Annual Software Cost 

Every organization’s calculation will look different. However, there are certain line items that are typically included.

Labor savings 

By now, you’ve already estimated the number of hours your team spends on activities such as manual invoice entry, approval routing, payment processing, exception handling, and fraud detection. Now, calculate the value of the time that could be reclaimed through automation. 

You can use this formula to calculate labor savings: hours × hourly rate × volume

The right finance technology can have a major impact. In fact, Ottimate customers save an average of $53,400 per year in labor costs from a reduction in invoice lifecycle times alone. 

Error reduction

Businesses that still rely on manual AP processes are more likely to run into duplicate payments, coding errors, and other potentially costly mistakes. Reducing these errors can have a meaningful impact on both direct costs and employee productivity. 

Fraud prevention

Invoice fraud can have a major impact on the bottom line. Finance technology that identifies potentially suspicious invoices helps reduce risk and costs. 

More early payment discounts and fewer late fees

Accounts payable solutions can help organizations capture early payment discounts and avoid fees due to late payment. 

Cashback earned on virtual card payments

Organizations that invest in a finance solution with a virtual card option may benefit from easy-to-quantify rebates and cashback on purchases. 

When evaluating hard ROI, avoid using industry averages or vendor-provided figures. Instead, use your organization’s actual volumes, labor rates, and transaction costs whenever possible. Doing so will give you a more realistic projection of the AP automation ROI you can expect. 

Step 4: Quantify soft (strategic) ROI

Soft ROI is often omitted from ROI calculations. It’s important to avoid this mistake. 

Though it’s harder to assign a dollar figure to strategic benefits, they can make a real impact on the business over time. So be sure to take stock of the strategic advantages that come from faster, more efficient finance operations. 

Some examples of strategic benefits include:

Faster close cycles

When finance teams spend less time searching for information, reconciling data, and resolving exceptions, they can close the books faster. Faster closes mean leadership teams have timely insights, which can power more confident, informed business decisions. 

Real-time spend visibility

Real-time insight into invoices, payments, and expenses gives leadership a clearer picture of where money is being spent, without having to wait until month-end close. This visibility can improve forecasting, cash flow planning, and budget management. 

Reduced audit prep time 

Automated workflows, centralized documentation, and complete audit trails make it less stressful to prepare for audits and maintain compliance. Teams don’t have to spend as much time hunting down documentation, which frees them up to focus on other initiatives. 

More time for higher-value work

When finance professionals are no longer bogged down by manual work, they have more time to focus on forecasting, analysis, vendor strategy, and other higher-value work that supports business growth. 

Soft ROI isn’t always part of a traditional ROI formula. But these benefits still create measurable value. To understand the true impact of finance technology investments, leaders must account for both hard savings and strategic gains. 

Step 5: Set a realistic payback timeline

It’s also important to have a clear picture of how long it’ll take to realize that value. Most AP automation solutions show measurable results within six to 12 months. However, there are a variety of factors that can impact that timing. 

Invoice volume

Organizations with high invoice volume typically see returns sooner. Why? Because even small efficiency gains can add up to significant savings at scale. For example, saving 5 minutes by automating ingestion may not seem significant. But multiply that across thousands of invoices, and it’s a massive savings. 

Current error rates

Businesses struggling with high error rates often uncover value more quickly by addressing these issues head-on. 

Process maturity

The more manual your existing AP processes are, the greater the opportunity for improvement. Companies that rely heavily on manual data entry, spreadsheets, and email approvals often see faster gains than those with more mature workflows. 

Adoption rates

Investing in technology will only deliver value if people are actually using it. Solutions with straightforward implementations, intuitive interfaces, and strong support will deliver results faster than those without. 

As you consider your options, be wary of solutions that offer ROI projections that seem too good to be true. They probably are. Pay close attention to red flags such as a lack of implementation support and extra costs that increase the total cost of your investment. 

Step 6: Pressure-test against real-world use cases 

Even the most detailed ROI model is still a projection. So before making a purchase decision, it’s important to test that projection against real-world results. 

Many software vendors provide ROI calculators and projected savings estimates. But it’s important to remember that these often rely on averages and assumptions that may or may not reflect your business’ actual challenges and goals.

So before making a purchase decision, be sure to seek out real-world evidence that supports your business case. 

Case studies from similar businesses
Ask for examples from within your industry. For example, if you work for a multi-location restaurant business, ask for case studies that reflect results in the restaurant industry. 

It’s also helpful to hone in on examples from organizations with similar invoice volumes, operational complexity, and process maturity. These relevant stories can help you understand what results are truly achievable and how long it’ll take for you to start seeing a measurable difference. 

Reference calls with current customers
Ask for customer references within your industry. After all, restaurants will have very different challenges and goals than retailers. 

Once you get the customer on the phone, be sure to ask about factors including:

• Implementation timelines
• Adoption hurdles
• Unexpected benefits
• Whether projected ROI aligned with actual results

Pilot programs 

A pilot can be a great way to understand how a solution actually works and delivers results within your business environment. Be sure to define clear KPIs up front, such as shorter processing times, fewer payment errors, or fewer manual touchpoints.

The goal of this step is to determine whether the projected value is realistic for your organization. The more you can test your assumptions before implementation, the more confidently you can make a purchase decision. 

Red flags when evaluating finance technology ROI

The biggest red flags when evaluating financial technology ROI include ROI models based solely on labor savings, solutions that automate only part of the process, complicated implementations, limited adaptability, and a lack of reporting tools to measure results. 

Red flag #1: ROI is based solely on labor savings

Reducing manual work is certainly valuable. But on its own, labor savings doesn’t tell the full story of ROI. 

Factoring in both quantifiable and strategic ROI is key to determining the full value of a solution. 

Red flag #2: Integration with the ERP is a heavy IT lift

Integration with your ERP is critical. But if those integrations require extensive IT resources, it can delay ROI and increase the total cost of ownership. 

Before making an investment, make sure you truly understand the implementation and integration requirements. 

Red flag #3: The tool only automates one step of the AP process

Many businesses fall into the piecemeal automation trap. They invest in a point solution that automates one part of the AP process, but they still manage other parts manually. Rather than eliminating manual work, it just moves it to another part of the process. Teams rely on manual workarounds to keep everything moving, and the gains they expected from their finance tech investments may never materialize. 

Red flag #4: The technology can’t adapt as your business changes

Change is inevitable. But when tools rely heavily on static rules, they often struggle to keep up with the ever-evolving needs of your businesses. 

Instead, look for AI-powered solutions that continuously learn and adapt. The right solution can support your business now and as it continues to grow and evolve, without requiring major rework. 

Red flag #5: There’s no reliable way to track ROI

A solution might promise significant ROI. But if it doesn’t provide a reliable way to track performance, it’s hard to tell if it’s really delivering on those promises. 

Look for solutions that provide real-time reporting, allowing you to measure results, identify opportunities for improvement, and demonstrate ongoing ROI. 

What strong finance technology ROI actually looks like

Strong financial technology ROI isn’t determined by any single metric. Instead, it’s evident through improvements that make finance operations more efficient, accurate, and strategic. 

Often, the first signs of ROI appear in day-to-day processes. For example, teams notice that invoices are approved faster, that fewer exceptions require manual intervention, and that they spend less time managing handoffs between disconnected systems. 

As efficiency improves, invoice processing time and costs go down, and teams have more time to focus on higher-value work. In addition, supplier relationships grow stronger because they know they can count on accurate, timely payments from the business.

Over time, organizations gain greater visibility into spending and cash flow, making it easier to plan, forecast, and manage risk with greater confidence. At the same time, audits get easier, and duplicate payments, invoice errors, and fraud risks are identified right away so they can be addressed before they cause damage. As mentioned earlier, Ottimate customers uncover an average of $1.4 million in duplicate invoice value per year, which is evidence that strong ROI can come from preventing financial losses and improving controls. 

Ultimately, strong finance technology ROI reflects a finance operation that runs efficiently, responds more effectively to risk, and scales to support business growth over time. 

Start measuring the full ROI of your finance technology

All too often, finance technology ROI formulas stop at labor savings. While cost savings from financial automation are important, the value of the right technology extends far beyond that single metric.

Best-in-class teams take a broader approach to finance tech ROI calculation. By establishing a baseline, defining what value looks like for the organization, calculating both hard and soft ROI, and testing projections against real-world results, finance leaders can make more informed technology investments. 

Ready to see how modern AP automation can deliver measurable ROI that extends beyond labor savings? Schedule a demo to see the impact of Ottimate firsthand.