The real cost of manual processes in a 50-person company

Why the real cost is usually hidden

Manual work rarely shows up as a line in the accounts. It is spread across many people in small slices: ten minutes here, an hour there. Nobody is hired to do it, so nobody measures it. Added up across a 50-person company, though, the time can be substantial.

The method below is deliberately simple. You can do it in a spreadsheet in an afternoon, using your own numbers rather than anyone’s average.

Step 1: the time cost

For one process, estimate three things and write them down.

1. Hours per occurrence: how long one run of the task takes, including chasing and checking.
2. Loaded hourly cost: salary plus employer National Insurance, pension, and a share of overheads, divided by working hours. Ask finance for a figure rather than guessing.
3. Frequency: how many times it happens per month or year.

The formula

Time cost = hours per occurrence x loaded hourly cost x occurrences per year.

Then add the hidden costs: error cost (how often mistakes happen x the time or money to put each right) and delay cost (what waiting costs you, such as late payment, slower quotes or lost enquiries). Total cost = time cost + error cost + delay cost.

Illustrative example

This example uses round, made-up numbers purely to show the arithmetic. Your figures will differ. Suppose supplier invoices are keyed in by hand. Each takes 10 minutes, the loaded cost is £25 an hour, and there are 200 invoices a month.

Time: 200 x 10 minutes = about 33 hours a month, x £25 = roughly £830 a month, or about £10,000 a year. Errors: if 4 invoices a month need 30 minutes to correct, that is another 2 hours, about £50 a month. Delay: if you value late-payment chasing at £100 a month, the total is roughly £980 a month. Again, illustrative only.

Costs that are harder to count

• Interruptions: skilled people pulled off higher-value work.
• Key-person risk: only one colleague knows how the process works.
• Staff morale: repetitive tasks affect satisfaction and retention.
• Customer experience: slow responses that never get recorded as a loss.
• Compliance exposure: missing records or inconsistent handling.

What to do with the number

Rank your processes by total cost and by how easy they would be to improve. The top left of that list is where to start. Remember that automation will not remove all of the time and has its own build and running costs, so treat the figure as the size of the problem, not the saving. The next step is to compare it with a realistic project cost.

Frequently asked questions