Increased efficiency, reduced costs: this is what companies achieve with full costing. It is useful for calculating the price of a product or service, for checking processes and business models and for comparing planned and actual costs.
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Created on 25.08.2023
Optimize invoice processes with full costing
Are you keen to know which invoicing method is best suited to sending and receiving your invoices? Find out in our article how full costing can help you make decisions.
What does full costing involve?
Full costing distributes all planned or actual costs during a period across different cost bearers – both individual and overall costs. The aim of full costing is for the price calculated for products, goods or services to cover all operating costs. This makes it suitable for long-term planning.
What is full costing not suitable for?
Full costing is not suitable for products with a market price. As the calculation is not based on usage, the calculated price ends up too high. It is also important to remember that the calculated price relates to a specific quantity. If this changes, a shortfall or surplus occurs. Companies should therefore use both full and partial costing .
Useful information
There is no general rule as to the interval at which costing should be carried out. Which costs you want to calculate, when you want to do it and to what extent depends on your individual requirements. This means you can simply perform full or partial costing as required.
What can companies allocate with full costing?
By calculating the price for individual costs and overall costs, you can optimize processes. For instance, you can calculate and compare the costs for various invoicing methods, e.g. post, e-mail or electronic invoices. To see what full costing might look like for sending and receiving invoices, let’s look at examples with paper-based invoices.
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Didoio AG sends its invoices by A Mail and wants to know how much the costs per invoice are. To find out, the company adds up the time needed for all the different processing stages (excluding returns management):
- Printing and packaging for the invoice (1 minute)
- Preparation and handover to Swiss Post (1 minute)
- Verifying receipt of payment (1 minute)
- Total time per invoice (3 minutes)
To calculate the costs for an invoice, the company also needs the internal hourly rate for invoicing. At Didoio, this amounts to CHF 60. The company also has to factor in CHF 0.40 for material costs (letter paper, envelopes, ink cartridges) and CHF 1.10 for postage.
- Time spent (3 : 60) x internal hourly rate (60) = CHF 3
- Material costs (CHF 0.40) + postage (CHF 1.10) = CHF 1.50
- Total costs per invoice = CHF 4.50
For a total of 45,000 invoices a year, the cost of sending invoices amounts to CHF 202,500 a year for Didoio AG.
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Didoio AG receives its invoices by post and wants to know how much the costs per invoice are. To find this out, the company adds up the total time needed for all the different processing stages:
- Receipt, verification and allocation (4 minutes)
- Forwarding, inspection and processing (2 minutes)
- Account allocation and entry in financial accounting (2 minutes)
- Archiving (1 minute)
- Total time taken per invoice (9 minutes)
To calculate the costs for an invoice, the internal hourly rate for invoicing is also needed. At Didoio, this amounts to CHF 60.
- Time taken (9 : 60) x internal hourly rate (60) = CHF 9
- Total costs per invoice = CHF 9
For a total of 70,000 invoices a year, the cost of receiving invoices amounts to CHF 630,000 a year for Didoio AG.
Compare costs with full costing
If you carry out full costing adapted to your company for all invoicing methods required, you will get a good overview of costs. The more automated the process is, the cheaper it becomes. Generally speaking, we can say that sending/receiving invoices electronically works out cheaper right from the first year, and even more so in subsequent years, despite implementation costs. The invoicing method you choose ultimately comes down to various factors (e.g. customer acceptance, supplier service, etc.) and is a very personal decision.
Find out more about this topic in the article “Electronic invoice exchange – the key points” and the whitepaper “Digital invoicing in B2C and B2B”.
Sending and receiving invoices: what PostFinance has to offer
E-bill
Companies use e-bill to send electronic invoices directly to their business customers’ accounting software with ease.
eBill
By using eBill, companies enable their private customers to pay and receive invoices digitally and easily with e-banking.
Paper Bill
Paper Bill saves companies the job of printing and sending paper invoices and optimizes returns processing. Companies are also supported in digitizing their invoice recipients.
